Money Matters, Simplified.
SAP bids for Sybase; deal valued at $5.8B
by Jamie Anderson - May 13, 2010 - comments
"With this transaction, SAP will dramatically expand its addressable market by making available its market-leading solutions to hundreds of millions of mobile users," averred Bill McDermott, co-CEO of SAP.
In a move aimed at increasing its foothold in the technology industry, Germany's SAP AG (SAPG.DE) made an all-cash bid, valued at $5.8 billion, for Sybase Inc. (SY.N). To fund the deal, SAP would use cash on hand and a 2.75 billion euro loan facility.
The deal, in which SAP is paying $65 a share for Sybase, a 44 percent premium over the three-month average value of the company's stock price, will help the Walldorf based company to diversify and not rely only on its core business of software development and consulting.
SAP's software for corporate payrolls and customer relations is widely used worldwide.
The takeover of Sybase by SAP was on the cards since last year when the two companies inked a partnership in mobile technology.
The synergy
Sybase, with its database products that are widely used by banks to store sensitive information, also has the expertise to make certain applications available on mobile devices.
"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's co-CEO Jim Hagemann Snabe said on a conference call.
Sybase’s technology enables customers’ access these applications from wherever they are. The memory tools of the company help such applications run faster.
By acquiring the Dublin, California based business software maker, SAP has stepped up its rivalry with Oracle Corp (ORCL.O). The latter has already pumped in over $42 billion in a buying binge, which saw the acquisition of close to 60 companies.
"With this transaction, SAP will dramatically expand its addressable market by making available its market-leading solutions to hundreds of millions of mobile users," averred Bill McDermott, co-CEO of SAP.
"This is a game-changing transaction for SAP and Sybase customers," noted McDermott.
Takes Oracle head on
By acquiring the Dublin, California based business software maker, SAP has stepped up its rivalry with Oracle Corp (ORCL.O). The latter has already pumped in over $42 billion in a buying binge, which saw the acquisition of close to 60 companies.
The present acquisition is being pegged as the second largest in SAP's 40-year history.
"SAP finally learned that they should take some clues from Oracle's playbook. They finally woke up. They are late, but late is better than never," said Trip Chowdhry, an analyst with Global Equities Research. "
As the news of the takeover broke, shares of Sybase skyrocketed and gained a whopping 35 percent during normal trading hours. They registered another 15 percent spike in the after hours trading. Meanwhile shares of SAP fell 1 percent Wednesday and an additional 2 percent after hours.