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October 7, 1998


By CBR Staff Writer

Red Brick Systems Inc is to lose its independence to Informix Corp, which signed a definitive agreement to acquire the company yesterday for just $35m. It’s a move that has looked inevitable for some time. Red Brick’s product business, based on an early introduction of star join database technology acknowledged to be more suitable for building data marts than general purpose relational databases, had gradually been eroded as the big database firms added their own versions. Oracle Corp, for instance, introduced star joins in Oracle 7.3, and combined that with bit mapped indexes in Oracle 8. Sybase acquired its IQ bit- mapped index technology from Expressway Technologies Inc in October 1994. Even Informix itself had hitherto boasted that its warehousing technology was complete with its XDS, Universal Server and Metacube products and technologies. Red Brick lost $18m last year on revenues of $43m, and revenues from its consultancy work had been eclipsing product revenues for some time. There was a management shuffle in July, and the company reported a high turnover in its sales force. But the company claimed that its Red Brick Formation data transformation and extraction tool acquired from Engage Technologies Inc last year (CI No 3,238) would help revitalize its business, along with a new vertical market approach. Informix said that it wouldn’t immediately merge the Red Brick products with its own, but said there would be an eventual evolution towards a single product line. It said the deal extended far beyond the technology to professional services, pre- and post-sales. Red Brick has 270 staff based in Los Gatos, California, which will be combined with the Informix data warehousing teams in Portland, Oregon and Oakland, California. The two have a number of joint customers, including MCI Worldcom Inc. Under the terms of the agreement, each share of Red Brick stock will be swapped for a 0.6 share of Informix common stock. The transaction will be accounted for as a purchase, and the two hope it will be closed by the end of the year, pending regulatory and shareholder approval and an independent audit of Red Brick’s first three quarters this year. Just before the agreement was announced, financier Bennett LeBow’s Brooke Group Ltd investment company took a 5.05% stake in Red Brick, claiming that the shares were undervalued. The group said it had acquired the stake in order to influence material business decisions at Red Brick. One of its proposals was the possibility of a business combination with data mining company Thinking Machines Corp, which is 73% owned by Brooke Group firm New Valley Corp.

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