Enterprise software giant SAP (NYSE:SAP), which has struggled over the course of the recession, is beefing up its competitive portfolio against rival Oracle, announcing it will acquire Oracle competitor and database vendor Sybase (NYSE:SY) in a deal valued at about $5.8 billion.
But it’s not just about competing with Oracle. It’s also about capturing the emerging part of the market – access to databases, ERP and application software systems from the mobile devices, such as RIM BlackBerry, in every executive and employee’s pocket.
"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 developing nation," said Jim Hagemann Snabe, co-CEO of SAP and member of the SAP executive board, in a statement.
"The combination of SAP and Sybase will give users the option of running their operations from leading mobile devices and will unleash the full power of mobility, including messaging interoperability, content delivery and mobile commerce services, across all companies and roles and in any location,” he added.
“In addition, innovation around Sybase's established database business will pave the way for 'real' real-time analytics and finally remove the decade-old barrier between business applications and business intelligence."
SAP also noted that partners of both companies will realize greater opportunities by tapping into the mobile capabilities of Sybase’s technologies to offer more mobile connectivity to customer organizations.
The deal calls for SAP to pay cash for all outstanding shares of Sybase common stock at $65 per share, representing a 56 percent premium over Sybase’s closing stock price on May 12. SAP will finance the deal with cash on hand and a $2.75 billion euro loan.
SAP says Sybase's mobile platform can connect all applications and data – both SAP and non-SAP -- and enable them on mobile devices. SAP, Sybase and their customers will be able to tap into Sybase's messaging network to reach 4 billion mobile subscribers through 850-plus operator relationships worldwide and engage their consumers via alerts, transactions and promotions on their mobile devices, the companies said in a statement.
"With this transaction, SAP will dramatically expand its addressable market by making available its market-leading solutions to hundreds of millions of mobile users, combining the world's best business software with the world's most powerful mobile infrastructure platform," said Bill McDermott, co-CEO of SAP and member of the SAP executive board, in a prepared statement.
SAP said it will continue to support each organization's product road map while enhancing products to help customers derive additional value from existing investments. Both companies' development organizations will remain intact, with the opportunity to cross-collaborate to increase innovation for customers.
Sybase will operate as a standalone unit of SAP, and Sybase’s management team will continue to run the business.
SAP expects the transaction to close in the third quarter of 2010 and be immediately accretive to SAP’s earnings per share.
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