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IBM to buy Cognos for 5 billion dollars

IBM Corp. announced Monday that it planned to buy Cognos Inc. for $5 billion (EUR3.41 billion) in cash in an evident attempt to keep pace with rivals in the field of "business intelligence" software.

Cognos shares rose nearly 8 percent in premarket trading.

The acquisition would follow similar moves in the same market this year. Software giant SAP AG recently linked up with Business Objects SA and Oracle Corp. grabbed Hyperion Solutions Corp. Cognos shares had soared recently on expectations that it, too, would be acquired.

However, the head of IBM's software group, Steve Mills, said acquiring Cognos - which already had a business partnership with IBM - was not inspired by those previous deals. IBM has been on an acquisition tear in recent years to build out its software portfolio and improve the company's overall profit margins.

"We never do acquisitions on defensive moves or based on what others are doing," Mills said in an interview.

IBM is offering to pay $58 per share in cash for Ottawa-based Cognos, a 9 percent premium over Cognos' $52.98 closing price on Friday. Cognos was trading in the mid-$40s before SAP's $7 billion (EUR4.77 billion) proposal for Business Objects was announced in October, accelerating expectations for consolidation in business-intelligence software.

Cognos shares rose $4.09, or 7.7 percent, to $57.07 in premarket trading Monday.

Business-intelligence software helps big organizations gather and analyze data from across their organizations, whether for modeling the financial impact of strategic decisions or making staffing changes.

IBM said Cognos' portfolio will fit in its information management software division. Cognos CEO Rob Ashe is expected to remain and report to the group's head Ambuj Goyal, after the deal is completed in the first quarter of 2008.

Cognos has 4,000 employees worldwide and serves more than 25,000 customers. It has U.S. headquarters in Burlington, Massachusetts.