09 June 2005 Management software company Computer Associates (CA) is to acquire governance solutions vendor Niku in a $350 million cash deal.

The rationale for the deal is to boost CA’s business service optimisation unit, says John Swainson, CA president and CEO. CA believes that the IT governance market is growing at a faster pace than its current portfolio.

“IT governance is the number one priority for CIOs as they demand that their IT investments contribute to the growth, productivity and profitabality of their organisations,” he said.

Niku had originally developed tools for professional services group, but subsequently re-oriented its focus around IT project management.

Joshua Pickus, president and CEO of Niku, says the combined company will provide a one-stop source for strategic planning, project, portfolio and services management and IT financial management. He is expected to join CA as the senior vice president of the business service optimization unit.

The acquisition makes sense for CA – although at the agreed price, it represents a 27% premium on Niku’s Wednesday closing share price. CA has seen Hewlett-Packard and IBM all look to expand into management software, and market watchers have stressed the need for it to broaden its product portfolio.

The two companies already worked with CA reselling and supporting Niku’s Clarity software products which help customers manage the lifecycle of their technology assets.

The deal is expected to close within three months.