John Chen, chief executive of Sybase. The sale to SAP is expected to close in months.
The acquisition puts SAP into the database software market, where its products will overlap with those of its longtime rival, Oracle, more than ever. As such, the deal heats up competition to gather, store and analyze the huge amounts of sales, customer and employee data being produced by modern companies.
Executives of SAP and Sybase said they intended to focus on creating new types of number processing software that rely on Sybase’s strengths in transporting data to and from the smartphones of customers.
“This will literally connect the shop floor to the corner office,” said Bill McDermott, the co-chief executive of SAP, during a conference call with Wall Street analysts to discuss the deal.
Under the terms of the deal, SAP plans to pay $65 a share for Sybase through a tender offer, a 56 percent premium to Tuesday’s closing price of $41.57. A report by Bloomberg News on Wednesday about the merger talks sent Sybase shares up 35 percent, to $56.14. SAP will also assume Sybase’s debt of $400 million.
Sybase, based in Dublin, Calif., will operate as a stand-alone unit within SAP under its current management. Assuming a majority of Sybase shareholders tender their shares to SAP, the deal is expected to close in the third quarter.
SAP, based in Walldorf, Germany, will finance the deal with cash on hand and a 2.75 billion euro ($3.5 billion) loan arranged by Barclays Capital and Deutsche Bank.
SAP’s traditional strengths revolve around selling often complex business software that helps companies deal with their day-to-day computing jobs like payroll, inventory tracking and sales.
Oracle has been invading SAP’s turf with its own products and by acquiring smaller companies at a furious clip. I.B.M. and Microsoft are also rivals.
All of these SAP competitors sell the database products that are needed to connect with the business applications, leaving SAP in the position of partnering with its foes — a situation that may change by acquiring Sybase and its database business.
Noel Yuhanna, an analyst at Forrester Research, chided SAP for not acquiring the database technology sooner because Oracle has been able to offer customers a more complete, tightly linked collection of software. “SAP is feeling the impact of that,” Mr. Yuhanna said.
SAP’s flagship software does not currently work with Sybase’s database. Mr. Yuhanna expects it to take at least six months to rectify this situation and about a year before customers would start buying a combined product from SAP.
An Oracle spokeswoman said the company declined to comment on the deal.
Sybase trails Oracle, I.B.M. and Microsoft by a significant margin in the database market, according the research firm Gartner. Sybase closed out last year with 3 percent of the market, compared with 43 percent for Oracle, 24 percent for I.B.M. and 19 percent for Microsoft.
But Mr. McDermott and other executives argued that the combined company has a chance to shake up both the business software and database segments. SAP has spent years working on a new type of data-handling technology that it claims will run jobs much faster than standard databases. The idea would be to create a fresh breed of business software that blends software from SAP and Sybase and uses this technology as its underpinning.
While Sybase trails its larger competitors, John S. Chen, the chief executive of Sybase, highlighted the company’s strength in dealing with investment banking customers, stock exchanges and insurers. Last year, Sybase sold about $800 million worth of database software and increased its software licenses 22 percent during the recession.
Sybase’s chief value may be the prominent position it has carved out in the mobile business software market. A flagging company when Mr. Chen stepped in to run it in 1998, Sybase now handles the short message (S.M.S.) traffic for close to four billion mobile phones and links the message systems of the phone companies, Mr. Chen said during a recent interview.
Executives from SAP and Sybase have already started talking about creating more involved mobile applications that will give remote workers access to floods of information.
Yvonne Genovese, an analyst at Gartner, described this mobile technology as “a big deal.” Large companies already started to push their standard business software out to mobile phones, and now they are trying to do more with the data that returns from the devices.
In February, SAP tapped Mr. McDermott and Jim Hagemann Snabe as its co-chief executives. Léo Apotheker, the previous chief executive, resigned as the company struggled through the recession.
0 comments:
Post a Comment