Oracle will buy business intelligence vendor Hyperion for more than $3 billion in cash, intensifying competition in the BI marketplace.

Oracle said it will combiner Hyperion's software with its own business intelligence (BI) and analytics tools, to offer customers a broad range of performance management capabilities, if the deal, Oracle's latest big purchase following acquisitions of applications vendors PeopleSoft, Siebel and others, is approved.

The deal will expand Oracle's portfolio of database, applications and middleware with a set of business intelligence products, which are used by companies to collect and analyze information about their businesses.

It continues Oracle's strategy of growing its revenue and customer base through major acquisitions. But it also presents the challenge of integrating the products and employees of yet another large company into Oracle, which has announced at least 28 acquisitions since the start of 2005.

The companies hope to close the acquisition by April, subject to customary closing conditions. Oracle has agreed to pay $52 per share for Hyperion, or about $3.3 billion, a premium of 21 percent over Hyperion's closing share price Wednesday.

Oracle had a handful of market-leading BI vendors to choose from, which also include Cognos and Business Objects. Hyperion was the best fit for Oracle both in terms of products and culturally, said David Mitchell, head of global software research with the UK analyst company Ovum.

Oracle has been trying to build out its own BI business, offering tools for integrating data among a number of applications and technologies. But its offerings were focused primarily towards customers of its own software, Mitchell said.

"Adding Hyperion to the family makes it a best-of-breed player, rather than just focusing on the traditional Oracle customer base," he said.

The acquisition could start a "domino effect" in which the other large BI vendors are also acquired, according to Mitchell

Part of Oracle's motivation for the deal appears to be to poach customers from its chief applications rival SAP AG: Many SAP customers use Hyperion software, and the acquisition will bring them closer to Oracle, Oracle President Charles Phillips said in a statement.

Hyperion says it has about 12,000 customers using its software, and about 2,500 employees spread over 20 countries. It reported revenue of $765.2 million for the fiscal year to June 30, 2006.

Mitchell said he doubts the Oracle acquisition will make much difference to SAP, noting that companies make big investments in their ERP (enterprise resource planning) software and then do not switch vendors lightly.

He predicted that Oracle will continue to support other databases with the Hyperion tools, rather than optimising them for its own database. The vendor has continued to support other platforms with the business applications it has bought, he noted.

"Oracle has started to get heterogeneity these days, unlike the Oracle of old," he said.

Still, Oracle executives in the past have discussed improving the business intelligence capabilities inside the Oracle database, and buying Hyperion could potentially give the company a selling point over database rival IBM. Hyperion is among IBM's business intelligence partners. Rumors continue to circulate that should IBM look to buy a BI vendor, the natural choice would be Cognos.

IBM is also close partners with Business Objects and is developing new products that integrate its data warehousing software with Business Objects' products, sources familiar with those plans said this week. IBM also has a relationship with open-source BI vendor Pentaho.