UPDATE 4-Teradata to buy cloud software firm Aprimo for $525 mln

* Deal to add to adj earnings in first yr after closing

* Sees Aprimo posting $80 mln in 2010 revenue

* Aprimo revenue to grow in high-teens in longer term

* Says cash deal subject to some adjustments

* Shares fall 3 pct (Recasts, adds details on financing, updates stock movement)

By Himank Sharma and Saqib Iqbal Ahmed

BANGALORE, Dec 22 (Reuters) - Enterprise data warehousing company Teradata Corp TDC.N agreed to buy privately held Aprimo for $525 million in cash to expand into cloud software services, as it gears up to meet challenges from larger rivals IBM IBM.N and Oracle ORCL.O.

The deal, expected to close in the first quarter of 2011, will be financed using cash on hand and borrowings under an existing credit facility, Teradata said on an analyst call.

Indianapolis-based Aprimo provides software to its enterprise customers, who use it to analyze data to map out their marketing and advertising efforts.

Cloud computing -- a technology that allows users to access data, software and services over the Internet and corporate networks -- is being touted as the next big trend in the technology sector.

Companies like Teradata, Oracle, EMC Corp EMC.N and IBM are shifting their focus from increasingly commoditized hardware to higher-margin software and services, particularly analytics, which help clients analyze market data to plot trends or prevent fraud.

Teradata's peers Netezza Inc and 3PAR have been snapped up in recent months by IBM and HP HPQ.N, respectively.

The Aprimo deal follows IBM’s $480 million purchase of Unica Corp, Aprimo’s rival, in October. [ID:nN13175286]

The transaction is subject to certain adjustments, including debt, proceeds from option and warrant exercises, and closing working capital, totaling about $50 million, Teradata said in a regulatory filing.

As of Sept. 10, Teradata had cash and cash equivalents of $741 million, according to StarMine data. The company, which had no outstanding debt as of Sept. 30, has a $300 million credit facility, a recent regulatory filing showed.


The deal puts Teradata, with a market value of about $7.21 billion, more into application space from being a database provider, Susquehanna Financial analyst Derrick Wood said.

“As competition in Teradata’s core market intensifies, it is looking towards related markets to branch out and diversify its total revenue,” Wedbush Securities’ Michael Nemeroff said.

The deal, expected to add slightly to Teradata’s adjusted earnings in the first year after closing, is seen by some analysts as its response to some of its bigger rivals making inroads into its core markets, specifically IBM and Oracle.

Aprimo’s 2010 sales are likely to be about $80 million. Revenue growth is expected in the high-teens longer term, Teradata said.

Aprimo, which counts Merrill Lynch and Warner Bros among its customers, had $68 million in revenue in 2009, according to its website.

Teradata shares, which have gained about 61 percent since touching a year low in February, were down 3 percent at $41.91 in afternoon trade on the New York Stock Exchange. (Reporting by Himank Sharma and Saqib Iqbal Ahmed; Editing by Gopakumar Warrier)