said Wednesday it would buy rival
for stock it valued at $880 million.
Under the terms of the deal, Informix plans to exchange 3.5 shares of its stock for every share of Ardent stock and assume the company's options. Based on Tuesday's closing stock prices, Ardent's shareholders would have received stock valued at $38.50, a premium of $12.25, or 47%, over Ardent's price.
But as often happens, the stock price of the acquiring company fell sharply on concerns that it might be paying too much. By midafternoon Wednesday, Informix's shares were down 1 3/8, or 13%, at 9 9/16. That reduced the value of the stock that Ardent shareholders would receive to $33.69 (Informix settled down 1 3/8, or 13%, to 9 9/16.)
Ardent's shares, meanwhile, jumped 4 11/16, or 18%, to 30 15/16 by midafternoon. (Ardent closed up 5 3/8, or 21%, to 31 5/8.)
Informix and Ardent both make business software used for storing and retrieving data.
Informix said it expects the deal to be accretive to earnings per share sometime next year, after non-recurring costs related to the transaction.
"The combination of Informix and Ardent is so compelling because it creates the market leader for the business intelligence infrastructure that makes this integration possible," said Jean Yves-Dexmier, president of the 19-year-old Informix, based in Menlo Park, Calif.
Ardent, based in Westboro, Mass., describes its showcase product,
, as "the only tool available today that provides data movement, full life-cycle meta data management, and data quality assurance for building your enterprise information infrastructure."
What that means, according to Bert Hochfeld, an analyst at
Josephthal & Co.
, is that the software fetches highly specified data from an extraordinarily specific database, which usually contains every bit of information about a company's business.
For example, he said, a hotel might use data warehousing software, which Informix makes, to store tidbits like how many guests arrived Tuesday night, how many parked rental cars, how many had room service and how many were attending a conference at the hotel the next day.
DataStage, he said, could retrieve and analyze combinations of those factors, allowing the hotel manager to figure out whether to ratchet up continental breakfast prices the next time a similar party comes through town.
Those pieces of software fit well, he said. But much of Ardent's assets comprise older versions of data warehousing software, which Informix doesn't need, he said.
"Most people would say Informix paid a lot of money for a little piece of Ardent," said Hochfeld, whose firm hasn't done underwriting for either company. He rates both stocks hold and said he plans to revise his estimations of both companies based on the deal.
James Pickrel, analyst for
Hambrecht & Quist
, rates Informix stock a buy and disagreed with Hochfeld's assessment of the deal.
He compared the DataStage software to a conveyer belt bringing together information that Informix's software stores. New features of Informix's software, not Ardent's DataStage, analyze the data, he said.
Although Ardent has acquired many types of technology that Infomix doesn't need, and although Infomix is paying a high premium, the deal is still worthwhile, Pickrel said.
"There is some redundancy there," he said. But "the growth area in Ardent, as far as I can see, has been DataStage." Pickrel doesn't cover Ardent. His firm hasn't done underwriting for either company.
Hochfeld said the deal suffered from one last problem: "We hate bicoastal mergers," he said. "They're tough, tough, tough."