CA is buying Niku, professional services automation (PSA) vendor turned IT governance player. Pretty much all the PSA companies turned into IT governance players and most were bought a while back as it became obvious it was not a large enough category to stand on its own.
Kintana was bought by Mercury Interactive, Evolve was bought by Primavera, and Changepoint was acquired by Compuware. Commenting on the acquisition of Changepoint by Compuware last April, Niku’s CEO Josh Pickus told me: "We’re the leading player in the space, and I’m delighted to compete with companies that are not best of breed governance players." Guess what? You’ve just been bought by one.
For a hefty price tag, too: CA is paying $350m in cash. Niku’s market cap was at $250m before the deal was announced and it had $68m in cash, so it’s easy to see how CA justified the price tag.
But with its latest financial year seeing revenue of $66m and net income of just $4m, it seems the company’s market cap was pretty optimistic to start with. The market clearly believes the company’s recent annual sales growth of 45% – that’s the 44th best in the industry according to the CBR list of Shooting Stars – is going to continue, and perhaps it will.
As for CA, it’s good to see that the company is returning to what it knows best: hoovering.