Saying ‘Goodnight’ to a stand-alone SAS?

Contact: Brenon Daly

After years of politely – but unequivocally – rebuffing all M&A approaches, is SAS Institute chief executive James Goodnight suddenly listening to pitches? Rumor has it that Goodnight, who has fashioned the business analytics vendor in the manner of a corporate patriarch of the 19th century, may finally be ready to sell. Any deal for SAS, of course, would have to go through Goodnight, as he owns two-thirds of the company outright.

If SAS is indeed in play – which, granted, is a big, multibillion-dollar assumption – it would represent a dramatic shift in not only the corporate history of the 35-year-old company, but also, more broadly, the landscape for business intelligence (BI) software. Goodnight has steered his firm on a path of independence through the years of consolidation in the BI industry. Most notably, he sat out the spree of deals in 2007 that saw his three largest publicly traded BI rivals get snapped up for a total of some $15bn.

All the while, Goodnight has been shaping a culture at SAS that is a bit of a throwback to the cradle-to-grave employee benefits that other tech vendors, which have to appease outside investors, could never offer. (Among the perks: a pianist who plays in the employee cafeteria, Olympic-sized swimming pools and even onsite Montessori childcare.) SAS employs more than 12,000 people.

SAS’s unique corporate traits have made it not only one of the most valuable privately held software companies, but also one of the most difficult to know what to do with it. (We have referred to SAS as the ‘white elephant’ of the software industry.) A decade ago, SAS worked with Goldman Sachs to explore a possible IPO, but that came to nothing. Goldman is thought to be running the current M&A process for SAS, too.

So that leaves a sale of SAS as Goodnight’s only exit. Companies rumored to be interested in SAS include Hewlett-Packard, IBM, Oracle, SAP and EMC, which is thought to be the lead horse at this point. But there’s still the not-insignificant matter of price. While still loose, the numbers we have heard for SAS, which recorded sales of $2.4bn in 2010, value the company at $12-13bn. Even a price only slightly above that range would make a purchase of SAS the largest-ever software deal, eclipsing Symantec’s $13.5bn stock swap for Veritas Software in late 2004.

Netezza nibbles

A few months after indicating it was ready to buy its way into analytics, Netezza has inked its first deal as part of the initiative. The company said last Thursday that it will pay $6.4m for NuTech Solutions. It’s largely an HR move, with Netezza picking up 30 scientists and engineers from the startup. The addition should help Netezza as it looks to run different types of complex analytics inside Netezza Performance Server, rather than just enlist help from partners – including vendors, academic institutions, developers and consultancies – through its existing Netezza Developer Network.

Rival data-warehousing vendors are also looking to add more smarts to their boxes. So far, however, that hasn’t meant much shopping. For instance, Teradata and SAS Institute cozied up and unveiled a joint roadmap last October involving integrating various SAS wares, including its analytics and data-mining algorithms, into the Teradata database. (Netezza also has partnerships with SAS and rival predictive analytics vendor SPSS.) Meanwhile, Greenplum also announced support for embedded analytics in the latest release of its warehouse, G3.

We wonder if the NuTech deal – Netezza’s first acquisition – is a bit of an appetizer ahead of a larger bite of the analytics market. We’ve highlighted a couple of tasty targets for Netezza, including existing partner Manthan Systems, which focuses solely on the retail industry, or KXEN, which would fit well with Netezza’s mission to expand the scope of its query technology. With its treasury stuffed with cash from its recent IPO, Netezza certainly has the resources to do the deals.  

Selected data warehousing-analytics transactions

Acquirer Target Announced Deal value
Teradata DecisionPoint Software Nov. 2005 Not disclosed
IBM Alphablox July 2004 $37m*
Netezza NuTech Solutions May 2008 $6.4m