Tuesday, March 01, 2011

Is SAP in Merger Talks? Who Might Buy SAP?

According to a WSJ article, German software giant SAP said it isn't in talks to sell itself, dampening persistent market rumors of an impending deal. There has been increased speculation recently following ex-SAP CEO Leo Apotheker becoming the CEO of HP where he said he would look to significantly build out a software and services business acting as “the glue” for all other lines of businesses. 

Leo even hired Marge Breya, a brilliant marketer from SAP/Business Objects to become the head of software and services under Ann Livermore. While it would be a big-too-big-to pull together for HP, SAP might just be what they need to catch up with Oracle and IBM. Should they choose go solo, they might find it increasingly more difficult to compete against IBM, Oracle and Microsoft, both of whom did look at SAP in the past but decided not to bid.

While the firm denies they are having merger talks with any party, it has been my experience that 9 out of 10 times, a deal sooner or later emerges out of these rumors at least in the hi-tech world! Time will tell….

"We're not having any talks with anyone," SAP co-chief executive Jim Hagemann Snabe said in an interview. He added that the more than 30% increase in SAP's share price over the past year, which added €20 billion ($27.5 billion) to its market value, makes the company a less attractive target.
Strong demand for SAP's business software amid the global economic recovery has fueled the share price rise. Despite those gains, SAP's narrow focus and relatively modest size have fed speculation that it would be an attractive target as the maturing tech sector consolidates around industry giants such as International Business Machines Corp. and Hewlett-Packard Co.
"The best medicine for SAP to stay independent is to stay successful," Mr. Snabe said in the interview at the CeBit technology conference in Hannover, Germany.
Mr. Snabe's comments come as the company has been trying to extend its reach into new areas.
At the Cebit conference SAP launched new so-called "on-demand" software, where companies pay a monthly fee to access the software using the Internet instead of a traditional license fee.
The Sales OnDemand software, which the company previewed Tuesday, is intended to help sales professionals better connect with their colleagues and manage customer information. It will be generally available by the second quarter, the company says.
Mr. Snabe said the product is unique, in part because it allows professionals to interact with each other in a similar way that Facebook Inc. allows its users to interact with friends.
He added that the company will launch other on-demand products that manage travel expenses or human resources by early next year.
Mr. Snabe reiterated SAP's guidance that the company would increase its software and software-related services sales between 10% and 14%, this year, and pledged to reach €20 billion in sales by the middle of this decade. SAP reported sales of €12.5 billion in 2010.
He added given uncertainties in the world, such as oil prices, the company will revisit the guidance quarterly.
The Walldorf, Germany concern also plans to offer business applications, including its new on-demand sales tool, for mobile devices such as tablets and smartphones. In July, the company purchased Sybase, a Dublin, Calif., provider of enterprise mobile software, for $5.8 billion.
To date, Mr. Snabe said the company's revenue has come mostly from its core business of selling traditional software licenses and maintenance services, but that he expects subscription based revenues from its on-demand software to make up a bigger share of sales this year.

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