A leading provider of Enterprise Data Warehousing (EDW) solutions, Teradata Corporation (TDC) announced that it will acquire Aprimo, a leader in cloud-based integrated marketing software for approximately $525 million in cash.
The acquisition is expected to be completed in the first quarter of 2011. Aprimo products will continue to be marketed and sold under its own name once the acquisition closes. The takeover is expected to be slightly accretive to Teradata’s non-GAAP earnings per share in the first year of closing.
The acquisition is one of the largest for Teradata. Although the company has made only two acquisitions since 2000, it has continuously added to its growth story and has remained focused on expanding organically.
Teradata acquired DecisionPoint Software, a provider of integrated data solution for financial management in late 2005. Post-acquisition, DecisionPoint’s products were integrated into Teradata’s financial management solution and rebranded as Teradata Decision Expert.
In 2008, Teradata acquired Claraview, a consulting service for business intelligence and data warehousing to expand its Professional Services capabilities. We expect these acquisitions to expand the company’s analytical data warehousing solution and augment its growth.
With the most recent deal, Teradata’s expertise in data warehousing and business analytics will be integrated with Aprimo’s marketing solutions. This will enable corporations to improve and optimize marketing performance with data-driven insights, thereby driving growth and profit over the long term.
Teradata will also benefit from Aprimo’s expertise in Cloud and Software as a Service (SaaS) offering. Further, Teradata will be positioned as a leader in integrated marketing management, marketing resource management and multi-channel campaigning, as pointed out by management.
The acquisition will aid Teradata in providing customers with end-to-end solutions available in SaaS and on-premise environments. Moreover, it will help Teradata compete against larger rivals International Business Machines Corp. (IBM) and Oracle Corp. (ORCL) in cloud-based offerings. To this end, Teradata launched its new cloud computing initiative, the Teradata Enterprise Analytics Cloud, which will further drive growth.
Aprimo will be included in Teradata’s business analytics portfolio. This should support Teradata’s analytics and applications business, including development, marketing, sales and services going forward.
Aprimo generated $68 million in revenue in 2009 and is expected to generate about $80 million in revenues in 2010. Over the long term, Aprimo is expected to grow revenue in the high-teens. The acquisition is expected increase Teradata’s customer base. We remain highly positive on the Teradata- Aprimo deal.
Teradata’s balance sheet remains strong with no debt. The company is sitting on a cash (cash plus short-term investments) pile of $741.0 million as of September 30, 2010 a $17.0 million increase from the end of the second quarter 2010. The company also generated impressive cash flow from operations. Teradata currently has $300 million available under its credit facility.
We maintain our long-term Neutral rating on the stock. Currently, Teradata is a Zacks #3 Rank stock, implying a short-term Hold rating.
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