Wednesday, June 23, 2010

SAP Not Interested in Buying Is SAP a Takover Target?

SAP (NYSE: SAP) is very much planning on moving into the cloud computing space but has “no interest in an acquisition of” (NYSE:CRM), according to co-CEO Bill McDermott. Following my long time friend Bill's appointment as co-CEO, I would expect a lot more aggressive SAP particulaly in acqusitions of  middleware integration and mid market software companies like to extend its market presence.

However, McDermott said that the company will instead enter the space through its Business by Design product. Business by Design, a multifunction full suite offering will be a “category killer” according to McDermott, as clients are not interested in a point system.

In order to maintain independence and avoid takeover by industry dynamos such as Oracle (NASDAQ:ORCL), McDermott said the company must “make our clients love us” and create an “ecosystem that creates reliance” on SAP.

Additionally, in order to fend off suitors SAP must grow organically, he concluded.

McDermott also said that the company’s acquisition of Sybase (NYSE: SY) is still on track for a 20 July close but did caution that date is merely “an estimate.”

On 12 May, SAP and Sybase, Inc., Dublin, California announced that SAP’s subsidiary, SAP America, Inc., has signed a definitive merger agreement to acquire Sybase, Inc., in a transaction that will bring the two information technology (IT) leaders together to enable companies to become better-run “unwired enterprises.” As a result of this transaction, customers will be able to better harness today’s explosion of data and deliver information and insight in real time to business consumers wherever they work so they can make faster, more informed decisions.

I was having lunch with a high-level Microsoft executive based in Redmond the other week. I asked him if Microsoft itself would be interested in buying SAP or I was told that they did in fact look at SAP "few times" in the past but could not justify the likely price tag. However, he said that they would be always open to smaller deals in their portfolio.

Enterprise IT space has gone though massive consolidation led by Oracle. We would likely be left with only a handful corporate vendors in the end - SAP may not be one of them as an independent company but I dohave the world's respect and admiration for the new CEO Bill McDermott to take SAP to new highs that should produce highly attractive premiums in a future buyout scenario.

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