Investors had expected the deal after SAP AG bid 4.8 billion euros (S$10.2 billion) for Cognos rival Business Objects SA in October and Oracle Corp bought Hyperion Solutions Corp  in April for US$3.3 billion.

All three targets make software that combs through vast amounts of data to analyze business trends.

International Business Machines Corp said it signed an agreement to buy Cognos for US$58 a share, a 9.5 per cent premium to its Friday closing price of US$52.98 on the Nasdaq. IBM expects the deal to close in the first quarter of 2008.

Oracle, SAP and now IBM are investing in business intelligence software to boost the allure of their product portfolios. Such programs interface with databases sold by Oracle and IBM, as well as business management software from SAP and Oracle.

Steve Mills, senior vice president and group executive of IBM Software Group, said he had been looking for several years to add business intelligence programs to IBM's products to offer more real-time and higher-performance analyses.

Software is the fastest-growing and most profitable division of IBM, the world's largest technology services company. IBM also uses software products to get customers to buy its consulting services and hardware.

Investors have long speculated that the most likely buyer for Cognos was IBM, which has worked with Cognos for more than 15 years. They have integrated some of their technology to serve joint customers, such as the New York City Police Department, MetLife Inc and Bayer UK.

IBM said it plans to integrate Cognos as a group within its Information Management Software division to be led by Cognos President and CEO Rob Ashe, reporting to General Manager Ambuj Goyal. -- REUTERS