Top 3 Israeli BI Takeover Targets

By Aaron Katsman

www.IsraelNewsletter.com 

Investors Business Daily had an interesting article a few days ago about the business intelligence (BI) software market. The article spoke about the industry being in the midst of a big round of M&A. The industry had sales of $23 billion last year, but there is no one company that dominates. In order to offer customers the complete software package, Many larger companies like SAP (SAP), Oracle (ORCL) and IBM (IBM) have been on the prowl, buying up smaller companies. Even Microsoft (MSFT) earlier this month had their first ever Business Intelligence conference.

BI systems help companies achieve a more in depth undertsanding of factors within their business, such as metrics on sales, production, and internal operations, all which help companies in making more well informed decisions.

The article mentioned a recent Goldman Sachs (GS) survey saying that Business Intelligence ranks as a top-five priority for tech spending. And Merrill Lynch analyst Edward McGuire said acceptance of business intelligence is firmly entrenched in the mainstream.

The article mentioned some potential takeover targets, but surprised me in their omission of three Israeli companies that seem ripe for the picking, and have actually been mentioned in takeover talk.

Retalix (RTLX), who automate and synchronize retail, distribution, and supply chain operations for stores, headquarters, and warehouses, has been rumored to be bought out by either SAP or Oracle for some time.

Fundtech (FNDT), which provides end-to-end financial transaction processing software solutions for financial institutions, has been rumored to be an acquisition target as well.

Verint (VRNT.pk) produces analytic software-based solutions for the security and business intelligence markets. Verint has been linked to IBM more than once over the last 12 months, and at hefty premiums to current market cap.

If you are looking for a way to play the M&A game in the BI space, have a look at Retalix, Fundtech, and Verint, three companies that appear to already be in play.

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Disclosure: Author’s fund is long FNDT, RTLX and VRNT.pk as of 5/30/07. He does not hold positions in the other companies listed. 

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.