CA Buys Compliance in Niku

Officials at Computer Associates put another feather in its business management portfolio cap with the $350 million acquisition of IT governance developer Niku , officials announced Thursday.

The all-cash purchase is expected to close within the next three months, officials said, pending regulatory and Niku shareholder approvals.

CA has been reselling Niku’s Clarity IT-Management and Governance software suite since February as part of a partnership agreement signed by the two companies in January.

“By combining and integrating Niku’s solution with CA’s Unicenter and overall systems management solutions, we believe CA can provide executives with unparalleled insight into their IT operations and help run IT like a business,” said Jeff Clark, CA’s COO.

Organizationally, Niku’s Clarity suite will continue to operate under CA’s business service optimization suite, which also includes the Islandia, N.Y., company’s business process management and service management offerings.

After the acquisition closes, Josh Pickus, Niku’s president and CEO, will move to CA as senior vice president of business service optimization. Pickus said one of his goals is to retain as many of his company’s core developers and staff of 290 as he can, targeting 100 or so key players to retain at CA.

While the acquisition shores up CA’s own integrated product stack, the deal is even better for Niku, as it gives it a big-company sponsor to compete against competitors, such as Mercury’s Kintana and Compuware’s Changepoint offerings.

Pickus said Niku has done extremely well competing against Mercury’s Kintana division, winning a number of high-profile customers based on the quality of his company’s product. But, he said, customers want big-name support.

“Where we lose to Kintana, it’s been because they’ve effectively made the case that they’re larger and that they have a bigger entity supporting them,” Pickus said. “I think with this transaction we have eliminated that; we’ve effectively made them the little guy, and I think we’ll be even more successful in competing going forward.”

The acquisition is further evidence of John Swainson’s strategy to grow CA through acquisitions. The newly elected president and CEO has said the strategy will help the company retain its edge in the marketplace rather than taking the time to build the software internally.

Clark said CA has $3.1 billion in cash and marketable securities as of the fourth quarter of 2004 and generates another $300 million every quarter to make additional acquisitions.

But for the near future, he said, the company will focus on integrating Niku and the recently closed acquisition of network service management developer Concord Communications.

That doesn’t rule out a buyout if the conditions are right, Clark said. If they find a company to fill out CA’s core systems, network management and security suites, officials said they would go after that company.

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