SAP has agreed to buy mobile data and device management company Sybase for $5.8 billion. The acquisition will allow SAP to own mobile and cloud computing technology that it believes to be critical to its future product development plans. The deal will also provide substantial revenue streams and technology that it can use to stay competitive with archrival Oracle.
Seeking to add new mobile application and cloud computing technology to its
portfolio, SAP on May 12
agreed to
pay $5.8 billion to acquire Sybase, a database and mobile enterprise
software company.
The acquisition will bring major new revenue streams and strategic
technology to help SAP to stay competitive
with archrival Oracle. Prior to the buyout,
Sybase
had been one of SAP's strategic partners.
SAP has identified mobile computing along
with cloud computing and its long-established on-premises enterprise resource
management applications as the main pillars of its business growth going
forward.
"Mobile devices are becoming the preferred interaction point with
business applications, whether the user is a factory supervisor, a retail manager
or an entrepreneur in a development nation," said Jim Hagemann Snabe, co-CEO
of SAP and a member of the SAP
executive board, in announcing the acquisition.
Yankee Group
analyst Sheryl Kingstone said her company has long suggested that SAP
should acquire Sybase "primarily because of the key partnerships that they
already have" developed over the past several years.
"Sybase brings to the table a mobile platform that can help SAP
transform their applications to be consumed anywhere, any time on any device.
This is crucial for SAP to stay competitive,"
Kingstone said. "Past Yankee Group reports have elaborated on the need for
enterprise applications to adopt cloud computing, mobility and social media
technologies-this deal gives SAP two out of
three in one purchase."
The deal was actually negotiated and closed as a result of a merger
agreement signed by SAP American, the parent
company's U.S.
subsidiary. SAP has agreed to pay $65 per
share for Sybase, a 44 percent premium over the company's three-month average
stock price. The Sybase agreement is SAP's
biggest acquisition since it bought business intelligence software producer
BusinessObjects for $6.7 billion in 2008.
SAP plans to pay for the Sybase
acquisition from cash and with a $3.488 billion loan from Barclays Capital and
Deutsche Bank. SAP officials said Sybase
will operate as a stand-alone unit under the name "Sybase, an SAP
Company."
Snabe told reporters at an April 14 news conference at SAP's Palo Alto, California product
development headquarters that the company had no plans to launch a prolonged and
expensive corporate acquisition campaign similar to the buyout spree
waged by Oracle when it acquired over 40 companies large and small starting in the early
2000s at a cost of well over $40 billion.
"You can
easily buy yourself growth in this industry," Snabe said at that press conference. But in the case
of Oracle, he said, the industry is "seeing lots of acquisition to build
revenue growth, but very little innovation. We have done the opposite. We have
tried to innovate" through product development in strategic areas such as
business process management and through expanding business intelligence, data
mining and data analytics, he said.
However, co-CEO Bill McDermott said SAP wasn't ruling out all future acquisitions. "If it fits into our strategy and helps
build our relationship with customers" SAP would not shy away" from a
corporate acquisition that "made sense," he said.
Sybase first rose to prominence in the mid-1980s as one of the early
developers of a commercial enterprise relational database. Sybase database
servers helped drive the development of client/server business applications
that diverted huge amounts of data processing capacity from once-dominant
mainframes and minicomputers to large arrays of networked microcomputer servers
supporting business applications running on PC desktops.
Sybase databases were widely adopted, especially in financial services and
other vertical industries. The company was also one of the prominent survivors
along with Oracle and IBM of the relational
database marketing battles of the '80s and '90s, in which other companies such
as Informix and Ingres fell by the wayside. There was even a period in the late
1980s when Sybase had a chance to supplant Oracle as the most prominent client/server
relational database company.
But by early '90s Sybase found itself falling behind in the database market
as a result of product development delays and other missteps.
Sybase returned to a steady growth path in the 2000s with the development of
mobile data and mobile device management products. Its iAnywhere Mobile Office
provides mobile e-mail and business workflow applications on multiple mobile
devices, while Sybase Afaria provides an administrative console for securely
distributing data and applications on mobile devices.
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