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SAP to acquire Sybase for $5.8 Billion
By siliconindia
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Thursday, 13 May 2010, 19:52 IST
Boston: SAP is planning to acquire California based business software maker Sybase for $5.8 billion and the acquisition would be the second largest in SAP's nearly 40 year history.
SAP's biggest acquisition to date is its $6.8 billion purchase of Business Objects in 2008. SAP's main rival, Oracle was the first major software maker to aggressively pursue acquisitions and has spent more than $42 billion to buy about 60 companies.
"SAP finally learned that they should take some clues from Oracle's playbook. They finally woke up," said Trip Chowdhry, an analyst with Global Equities Research.
Sybase provides solutions that make it easy for customers to access business software via smartphones and other mobile devices. The German based software firm SAP already uses the technology to let customers access its applications when they are on the move. Executives of SAP and Sybase said they intended to focus on creating new types of number processing software that rely on Sybase's strengths in transporting data to and from the smartphones of customers.
"We want to make sure SAP solutions can be accessed from all leading mobile devices. The acquisition of Sybase will allow us and our partners to do just that," SAP Executive Board Member Snabe said.
Sybase also provides database that large companies, such as banks, use to store sensitive information. It is the fourth-largest maker of database software after Oracle, IBM and Microsoft.
Jefferies & Co analyst Ross MacMillan said Sybase's most valuable asset is its mobile software because it will give SAP an edge over Oracle when it comes to allowing customers to use business management programs on the go. Those products only accounted for about 27 percent of Sybase's $403 million in software sales last year. The bulk of revenue came from Sybase's database, which is rarely used in conjunction with SAP's software products.
MacMillan said it is not clear how the Sybase database would fit into the rest of SAP's business of selling software for managing business tasks, such as accounting, human resources and manufacturing.
According to Praveen Bhadada of Zinnov Mangement Consulting, the acquisition is key for SAP to enable its customers access the SAP applications on mobile. With India becoming the second largest base of mobile handset devices shipped annually, SAP may well see a great opportunity to grab the fast growing mobile applications market.
SAP has agreed to pay $65 per share in cash for Sybase and it would fund the deal with cash on hand and a 2.75 billion euro loan facility. The companies said they expect the transaction to close during the third quarter, immediately adding to SAP's earnings.
