Oracle Lives Larger

Oracle(ORCL Quote) has stirred the pot again.

After months of denying that it was in the market for yet another major software company, the database giant has snapped up business intelligence vendor Hyperion Solutions(HYSL Quote) for $3.3 billion, or $52 a share.

Minus cash on hand, the deal will cost Oracle $2.9 billion. Wall Street's reaction was positive. In recent trading, shares of Oracle were up 31 cents, or nearly 2%, to $16.74, despite the hefty outlay. Hyperion soared $8.70, or 20%, to $51.54.

The purchase bolsters Oracle's position in the market for financial analytics applications, which Hyperion leads, and creates a headache for SAP(SAP Quote), whose many customers use Hyperion's applications and tools.

Indeed, the SAP connection was highlighted in a press release announcing the deal. "Hyperion is the latest move in our strategy to expand Oracle's offerings to SAP customers," said Oracle President Charles Phillips. "Thousands of SAP customers rely on Hyperion as their financial consolidation, analysis and reporting system of record.

Now those customers will be turning to Oracle, though few are likely to abandon SAP altogether, says IDC software analyst Dan Vesset. Even without the SAP angle, Hyperion fits well with Oracle's strategy of beefing up its business applications, he added.

The move wasn't terribly surprising. Takeover rumors had goosed the stock of Hyperion rivals in the business intelligence market -- Cognos(COGN Quote) and Business Objects (BOBJ Quote) -- for more than a year, and Oracle was always considered the leading candidate.