Monday, October 29, 2007

FT.com / Companies / IT - Oracle walks away from BEA offer

FT.com / Companies / IT - Oracle walks away from BEA offer

Oracle walks away from BEA offer
By Richard Waters in San Francisco

Published: October 29 2007 00:45 | Last updated: October 29 2007 00:45

Oracle late on Sunday carried through on its threat to drop its $6.7bn offer for BEA Systems, though it did not rule out renewing its bid if shareholders succeed in pressuring the embattled software company to put itself up for sale.

It also issued a thinly veiled invitation to Carl Icahn, the activist shareholder who has become one of BEA’s biggest shareholders, to launch a proxy battle to force BEA’s hand.

“If the BEA shareholders are unhappy with the behaviour of the board, it is up to those shareholders, not Oracle, to take the appropriate action,” it said in a statement late on Sunday.

The comments came minutes after 5pm California time, the deadline set by Oracle for BEA to agree to its $17-a-share offer. BEA had already said it planned to let the deadline lapse, and that it would not consider a sale for less than $21 a share.

Oracle said that its offer had now expired, and that BEA shareholders should “not assume” it would renew the bid at that price in the future. “Over time many things can change,” the company said. “BEA’s business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere.”

Mr Icahn called on BEA’s board late last week to start negotiations with Oracle rather than let it walk away. He has also indicated he will take legal action to prevent BEA from taking any actions that would make it less vulnerable to a takeover.

“They are vulnerable to a proxy fight and they know it,” said one shareholder, who said that the BEA board was likely to accept a bid below the $21 it has held out for.

However, any attempt to force BEA’s hand is likely to be complicated by the investigation that is currently underway into its accounting for stock options. While that review continues, the company is not able to file accounts or hold a shareholding meeting, effectively putting it into limbo.

Copyright The Financial Times Limited 2007

Saturday, October 27, 2007

FT.com / Companies / IT - Icahn criticises BEA over Oracle bid

FT.com / Companies / IT - Icahn criticises BEA over Oracle bid

Icahn criticises BEA over Oracle bid
By Richard Waters in San Francisco

Published: October 27 2007 03:30 | Last updated: October 27 2007 03:30

Activist investor Carl Icahn turned up the heat on BEA Systems on Friday, pressing the embattled software company to let shareholders decide on a $6.7bn bid from Oracle if no better offers emerge.

His call came after BEA had declared that it was quite prepared to let Oracle walk away rather than start negotiations at the price that is currently on the table.

Mr Icahn’s intervention late on Friday came as the two software companies prepared for a weekend of brinkmanship over the unsolicited bid. Oracle has promised to abandon its offer, of $17 a share in cash, by Sunday afternoon if BEA does not either accept the terms or agree to let its shareholders vote on the proposal.

For its part, BEA on Friday released a terse letter that repeated its view that the price “significantly undervalues” the company, and that it therefore assumed the offer would expire this weekend. The biggest independent maker of the “middleware” used to build internet-based applications, BEA has held out of a price of $21 before it will enter negotiations.

Rather than risk losing the premium represented by the Oracle bid, BEA should launch a full auction of the company, Mr Icahn said.

“If a topping bid emerges, then all the better,” he said. “But if no topping bid arises it should be up to the BEA shareholders to decide whether to take the Oracle bid or remain as an independent company.”

One person familiar with the matter said BEA had held discussions with other technology companies since Oracle went public with its offer earlier this month. However, the nature of those discussions, or whether another bidder might emerge, was unclear.

Few rival bidders would be able to match the sort of cost savings from a deal that Oracle could achieve, according to analysts. One of the few that could, IBM, is BEA’s biggest rival, making it likely that any offer would attract anti-trust attention. The scale of the potential savings have led some analysts to suggest that Oracle could pay over $20 a share for BEA and still generate short-term financial benefits for its shareholders.

Copyright The Financial Times Limited 2007

Friday, October 26, 2007

The Future of Software? Think Visual Apps | AMR Research

The Future of Software? Think Visual Apps | AMR Research

The days of static applications will soon be over, as will 2D screens that look like forms or reports. The future is coming and it’s far more visually appealing.

Since the start of this year, we’ve been tracking a wide range of companies and concepts that will change how we think about and use software. This week, we introduce Forterra Systems and provide some insights from recent meetings with IBM and salesforce.com.

Wednesday, October 24, 2007

FT.com / Companies / IT - Oracle issues BEA deal ultimatum

FT.com / Companies / IT - Oracle issues BEA deal ultimatum

Oracle issues BEA deal ultimatum
By Richard Waters in San Francisco

Published: October 24 2007 03:48 | Last updated: October 24 2007 03:48

Oracle on Tuesday threatened to walk away from its proposed acquisition of BEA Systems by Sunday unless the embattled software company agreed to a deal.

While the threat wiped nearly 4 per cent from BEA’s share price by mid-afternoon, the stock still stood above the $17-a-share Oracle offer, pointing to a belief on Wall Street that the brinkmanship had not seriously damped the prospect of a deal and that Oracle or another buyer would still end up paying a higher price.

“Oracle has no interest in a long, drawn-out process to acquire BEA,” Chuck Phillips, Oracle’s president, wrote in a letter addressed to the company’s board on Tuesday. The letter followed what Oracle said had been another rejection by the BEA board of its all-cash offer.

BEA rejected the latest approach, repeating its earlier claim that the offer “seriously undervalues” the company and adding that it was open to “a transaction that appropriately reflects BEA’s value, reached through a reasonable process.”

The attempt to bring a quick end to the BEA battle is in stark contrast to the fight over PeopleSoft, the deal that launched Oracle’s ambitious attempt to force consolidation in parts of the business software market. That fight lasted 18 months, in part because Oracle had to persuade a court to overturn a US antitrust objection to the deal.

Though he started by offering $16 a share for PeopleSoft and insisting at one point that that was his “final” price, Larry Ellison, Oracle’s chief executive officer, eventually paid $26.50 a share to win over the PeopleSoft board.

Justifying the offer for BEA, Mr Phillips said it represented a 21 per cent premium to the price the day before the proposal was announced and a 44 per cent premium to the level before activist investor Carl Icahn disclosed in August that he had bought a stake in the company.

Mr Icahn, BEA’s biggest shareholder and a critic of the company’s management, has been pressuring BEA to find another buyer.

Copyright The Financial Times Limited 2007

Tuesday, October 23, 2007

SAP to Bolster Business Rule Capabilities With Yasu Buy

SAP to Bolster Business Rule Capabilities With Yasu Buy

SAP's offer to acquire Yasu will bring business rule engine technology to NetWeaver customers. This smart, if late, acquisition will challenge the status quo of the BRE and business process management technology markets.

Friday, October 19, 2007

Oracle Seeks to Consolidate the Middleware Market With BEA Deal

Oracle Seeks to Consolidate the Middleware Market With BEA Deal

Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.

SAP Software Sales Soar 16% | AMR Research

SAP Software Sales Soar 16% | AMR Research

SAP posted another strong quarter, as expected, for its third quarter ending September 30. Software and software-related service revenue topped 1.74B euros, up 16% in constant currencies from the year-earlier period. Total revenue was 2.42B euros, up 13% in constant currencies. Translated to dollars at the rate of this writing, SAP’s revenue came in at $3.46B. SAP repeated guidance of 12% to 14% growth for the full year.

There were at least two departures from previous earnings calls. For one, the call was audio only, compared to previous video broadcasts. Secondly, there are normally three presentations: the opening set of financial results from CFO Werner Brandt, additional color from CEO Henning Kagermann, and a review of global sales performance from Deputy CEO Leo Apotheker. If you go to SAP’s website, you will only see Mr. Brandt’s slides.

Mr. Apotheker had several interesting statistics that didn’t make it into the slides or the press release. The number of new contracts increased 22% from the year-earlier period. New customers accounted for 26% of order entry. Midmarket customers represented 34% of the new contracts. The number of deals greater than 5M euros was 20% versus 33% for 3Q06. Last year, there were more deals in the 10M to 20M euro range; Mr. Apotheker said that the 20% figure was more typical. The number of deals less than 1M euros was 46% versus 36% last year. This is due to increased sales to smaller companies.

It would be helpful to have a bit more color on the number of contracts signed. SAP closed the second quarter with 41,200 customers and ended this quarter with 43,400, an increase of 2,200.

Wednesday, October 17, 2007

Oracle Seeks to Consolidate the Middleware Market With BEA Deal

Oracle Seeks to Consolidate the Middleware Market With BEA Deal

Oracle's offer to buy BEA Systems will create short-term uncertainty. If the deal proceeds, Oracle will strengthen its position and emerge as the most powerful competitor to IBM, the current middleware market leader.

Tuesday, October 16, 2007

FT.com / Companies / US & Canada - Executive departure may delay Oracle plan

FT.com / Companies / US & Canada - Executive departure may delay Oracle plan

Executive departure may delay Oracle plan
By Richard Waters in San Francisco

Published: October 16 2007 22:46 | Last updated: October 16 2007 22:46

Oracle’s ambitious plan to unify the software applications it assumed through acquisitions appeared on Tuesday to be heading for a delay, following news that the executive in charge of the project is to leave the company.

John Wookey’s elevation two years ago to run Project Fusion put him in one of the most high-profile positions in the company following its purchases of PeopleSoft, Siebel Systems and other smaller companies.

By unifying these companies’ software applications on a single-code base, Fusion is intended to create integration between the various products, making it a central part of Oracle’s long-term strategy to compete with SAP.

Oracle refused to comment on Mr Wookey’s position. Yet one person close to the company said he would leave early next year, after a transitional period. The job of overseeing the Fusion work has been passed to Thomas Kurian, who will combine it with responsibility for Oracle’s middleware, the software layer on which the applications depend.

The shake-up has also led to greater responsibilities for Charles Rozwat, executive vice-president of server technologies.

The upheaval has prompted speculation that Fusion has fallen behind schedule. Large parts of the software seem likely to appear next year as planned, according to the person close to Oracle, though this person stopped short of saying the entire project would be completed next year.

Copyright The Financial Times Limited 2007

SAP haalt neus op voor BEA Systems | Nieuws | Strategie | Computable.nl

SAP haalt neus op voor BEA Systems | Nieuws | Strategie | Computable.nl

FT.com / Companies / Media & internet - SAP falls on static full-year forecast

FT.com / Companies / Media & internet - SAP falls on static full-year forecast

SAP falls on static full-year forecast
By Gerrit Wiesmann in Frankfurt

Published: October 18 2007 23:56 | Last updated: October 18 2007 23:56

Shares in Germany’s SAP dropped Thursday after it shied away from raising its full-year forecast even after a solid nine months’ business.

SAP stock closed 3.3 per cent lower at €38.29 after reporting that software sales rose 11 per cent – or 15 per cent at constant currencies – to €715m in the third quarter, while operating income rose 9 per cent to €601m.

Although these figures were in line with analysts’ expectations, investors were rattled by SAP’s refusal to raise its full-year forecast. They now fear the world’s largest maker of business software is preparing for a weaker-than-expected Christmas quarter.

The company’s share price was under pressure last week after it caught investors off guard in announcing the €4.8bn ($6.8bn) takeover of rival Business Objects, a move many saw as an end to a strategy of organic growth.

Henning Kagermann, chief executive, said he expected full-year revenue from software and software-related services to grow at the upper end of the forecast range of 12 per cent to 14 per cent in constant currencies.

Given that growth in the first nine months of the year reached 16 per cent, analysts at Citibank lamented that “implied growth” of about 10 per cent in the all-important fourth quarter looked disappointingly conservative.

The company did not reach its targets in the final quarter last year, a clear sign of the dangers it faces as it tried to broaden its product scope from a saturated market for supplying software to the world’s biggest companies.

In July, August and September, SAP saw overall sales rise 9 per cent – 13 per cent at constant currencies – to €2.4bn. It said it had gained one point in market share and now held 27 per cent.

Copyright The Financial Times Limited 2007

Sunday, October 14, 2007

FT.com / Companies / IT - SAP allays fears of Oracle bid war

FT.com / Companies / IT - SAP allays fears of Oracle bid war

SAP allays fears of Oracle bid war
By Gerrit Wiesmannin Frankfurt

Published: October 14 2007 22:03 | Last updated: October 14 2007 22:03

SAP has sought to allay investor fears about a new bidding rivalry between the German business software maker and US rival Oracle by pledging big acquisitions only to enter new markets rather than to consolidate existing ones.

Henning Kagermann, chief executive, said the offers by SAP for software maker Business Objects and that of Oracle for BEA Systems – both valued at €4.8bn – showed the two groups were still on different paths.

“We bought a company that complements our product line in a fast-growing market in which SAP is not market leader,” he told the Financial Times.

“We believe in complementary deals. We’re not interested in a classic consolidating of markets.”

Investors last week dumped SAP stock for fear the largest business software maker in the world had given up its goal of growing organically to ape Oracle, which has spent $31bn (€21.8bn) on rivals in recent years. The German group’s stock price lost 5 per cent after it announced by far its biggest acquisition to gain a leading position in the market for business analysis programmes, an “end-user” area in which SAP is weak.

But investor fears of a bidding war with Oracle ebbed on Friday when the US group announced an unsolicited bid for BEA Systems, a move to consolidate its position among makers of software to bundle disparate applications. Mr Kagermann said SAP was well positioned in the market for so-called service oriented architecture.

He was not considering a counter offer for BEA, or a bid for any other company in a market that had “so much overlap” with SAP.

He said this was consistent with SAP’s strategy of growing organically in its two core units that provide the software spine or “platform” for corporations, and address the needs of small and medium-sized companies.

But he repeated adverse investor reaction would not stop SAP from committing to more deals in the end-user market. “We’re categorically not excluding further big acquisitions,” he said.

Business Objects specialises in programmes that sift corporate data to help executives decide strategy. Mr Kagermann noted “that many analysts believe that there are still interesting opportunities in this sector”.

Copyright The Financial Times Limited 2007

FT.com / Companies / US & Canada - SAP warns surprise tactics might resurface

FT.com / Companies / US & Canada - SAP warns surprise tactics might resurface

SAP warns surprise tactics might resurface
By Gerrit Wiesman

Published: October 14 2007 23:48 | Last updated: October 14 2007 23:48

Perhaps Henning Kagermann, the chief executive of German business software maker SAP, senses that catching investors off guard once could be construed as an accident, but that doing it twice could smack of carelessness.

In January, the world’s biggest maker of business software shocked the stock market when it announced that a new internet-based product for small companies would demand computer centres costing an unexpected €400m ($566m).

Last week, the company surprised again by appearing to give up on its strategy of growing organically when it bid €4.8bn ($6.7bn) for Business Objects, a Franco-US company specialising in corporate analysis software.

“Finding the right way to communicate is a challenge,” Mr Kagermann tells the FT.

“We don’t want to surprise the market too much. At the same time, we don’t want to be taken hostage so that we can’t react quickly anymore.”

Having watched SAP stock take a drubbing for the second time running after a big strategic announcement, he almost ruefully concedes: “We always try our best to master this challenge. But sometimes our efforts aren’t perfect.”

It is a delicate mea culpa that follows a week in which SAP shares closed at €39.51 in Frankfurt, 5 per cent below prices seen before the announcement last week of its agreed bid for Business Objects.

The punishment meted out by investors may have been a touch harsher in January, when shares fell almost 7 per cent. But the recent drop still stings.

“I didn’t expect to see such a big market reaction,” Mr Kagermann says.

But he is too self-assured and too convinced of his mission to do more penance than that.

As humbled as he may feel, his message throughout the rest of the interview is clear: “I don’t think we could have done it any other way.”

For one thing, he says stock market reactions in January and October were not comparable.

Investors knew SAP was working on a new so-called mid-market product, what surprised some was the cost of online availability.

“A year before [the announcement], I had flagged the fact that we no longer excluded on-demand solutions for [so-called] ERP [enterprise resource planning] applications,” he says – and it was only later that SAP could forecast the cost of the move.

Flagging a major acquisition would, to boot, have been counter-productive, he says.

“It wouldn’t have been very helpful to say, ‘We’re looking at acquisitions in this and this area’ because there weren’t that many targets around.”

Mr Kagermann stresses that investors are wrong to see an end to SAP’s organic-growth strategy: It will continue in the core areas of providing the software spine to big corporations, and addressing the needs of smaller companies.

“The business user segment is a different field,” he says. A fast-growing segment in which SAP was not market leader, it called for a different approach.

“We want to buy innovation,” he says, signalling an appetite for more.

At the same time, he says SAP is not embarking on an acquisitive strategy in this field akin to its American rival Oracle.

It has spent $31bn in the three years to buy rivals and consolidate the various markets it is in.

The top priority now is to integrate Business Objects. Mr Kagermann hopes this will be done by 2009.

“By then we should have been able to convince the market that this was the right decision,” he says.

But he cautions: “You can’t pass up opportunities just because you feel you need a quarter or half a year to prepare for them.”

Perhaps he fears that shocking shareholders a third time would appear deliberate. Now they have been warned.

Copyright The Financial Times Limited 2007

Friday, October 12, 2007

FT.com / Companies / IT - Oracle launches $6.7bn bid for BEA

FT.com / Companies / IT - Oracle launches $6.7bn bid for BEA

Oracle launches $6.7bn bid for BEA
By Kevin Allison in San Francisco and Maija Palmer in London

Published: October 12 2007 13:33 | Last updated: October 12 2007 23:38

Oracle, the US business software company, on Friday made an unsolicited $6.7bn (£3.3bn) bid for BEA Systems, a San Jose-based software maker that has come under pressure from Carl Icahn, the billionaire activist investor.

The deal comes as Oracle is trying to overtake rivals SAP and IBM by pursuing an aggressive acquisitions strategy.

BEA rebuffed the offer, arguing that it “significantly undervalues” the company.

Shares in BEA rose above Oracle’s offer price of $17 a share, indicating investor hopes of an increased bid. On Friday, shares in BEA closed more than 38 per cent higher at $18.82.

Oracle’s $17-a-share offer represented a 25 per cent premium to BEA’s share price at the close of business on Thursday.

“We have made a serious proposal including a substantial premium for BEA,” said Charles Phillips, Oracle president. “We believe our all-cash offer provides the best value for BEA’s shareholders and the best home for BEA’s employees and customers.”

If successful, the deal would represent Oracle’s biggest takeover since its $10.3bn acquisition of PeopleSoft three years ago.

It would also mark the latest in a string of deals in the software sector this year. SAP earlier this week announced plans to buy Business Objects, the Franco-US software company, for $6.7bn.

Shares in Oracle edged 2 cents lower to $22.44 on Friday in New York.

Mr Icahn last month sparked a fresh wave of takeover speculation when he reported that he held more than 8 per cent of BEA shares and called for the company to be sold.

The corporate raider has since increased his stake in the company to 13 per cent. Mr Icahn did not return a request for comment.

Shares in BEA, which makes middleware, or software that connects business functions such as billing and supply chain management to back-office databases, fell more than 30 per cent between October and March. They began to rise again in August after the company reported its second-quarter results.

BEA has been the subject of takeover speculation since the beginning of the technology downturn in 2001.

The company was an early leader in the middleware market but it has struggled to gain momentum in recent years amid strong competition from rivals such as Oracle and SAP, both of which have moved to bolster their middleware offerings.

Charles di Bona, an analyst at Sanford Bernstein, said the deal’s valuation was “financially unattractive” for Oracle at $17 a share. However, Brent Thill, an analyst at Citigroup, said a price of up to $20 a share could still make financial sense for Oracle, assuming big cost cuts at BEA. Mr di Bona said he did not expect a rival bidder to emerge.

Copyright The Financial Times Limited 2007

SAP Customers on Business Objects; salesforce.com’s VC Fund | AMR Research

SAP Customers on Business Objects; salesforce.com’s VC Fund | AMR Research

SAP Customers on Business Objects
by Bruce Richardson


By now, you know that SAP is buying Business Objects. (See “SAP Buys Business Objects” below in News of Note for more details.) When the deal is completed in 1Q08, SAP will have the broadest business intelligence / performance management (BI/PM) offering in the world. That’s both good news and bad news. If anything, SAP will have too many products.

I spent two days last week with 15 IT executives at an SAP event, and they all wanted to talk about the Business Objects deal. Ironically, the last time I saw most of these people was the week after Oracle announced that it was buying Hyperion for $3.3B. Many were Hyperion customers, too.

When I asked how many had Business Objects software in their companies, more than two-thirds of the executives raised their hand. I then asked whether they had Hyperion, and the same people raised their hand again. It will be interesting to see whether these executives can get their companies to adopt SAP-Business Objects as their standard or if they will continue to support a multivendor BI/PM world.

When Oracle bought Hyperion, several of the SAP customers I talked with were looking at big Hyperion upgrade bills. They were hoping that SAP would soon unveil plans for bolstering its business consolidation software. Six months later, they are still waiting for SAP to declare its plans for weaning them off of Hyperion.

SAP won’t be able to discuss its plans for Business Objects until the deal closes. The customers I talked with were concerned about which of the SAP and Business Objects products will survive. This is a bit unsettling for those that have already started down the Pilot Software or OutlookSoft path.

At the SAP event, several CIOs told me that their Business Objects reps were filling their BlackBerrys with invitations to seminars or requests to meet. I would expect the Business Objects reps to be very aggressive; I’m sure all good salespeople are racing to drain their pipelines before the deal closes.

What should SAP customers do for BI/PM? In next week’s First Thing Monday, we’ll look at areas SAP needs to address for this to work.

Thursday, October 11, 2007

Crossgate Challenges B2B Market With Tight Alliance With SAP

Crossgate Challenges B2B Market With Tight Alliance With SAP

Crossgate has announced an alliance with SAP that has the potential to change the vendor dynamics in the business-to-business infrastructure market. But crossgate will need to grow rapidly to ensure market success.

Wednesday, October 10, 2007

SAP's Planned Business Objects Buy Signals Strategic Shift

SAP's Planned Business Objects Buy Signals Strategic Shift

SAP's plan to buy Business Objects will put SAP into the lead for revenue from business intelligence platform products. However, many integration and execution challenges lie ahead.

Monday, October 08, 2007

Übernahme von Business Objects SAP befeuert Software-Krieg - Wirtschaft - sueddeutsche.de

Übernahme von Business Objects SAP befeuert Software-Krieg - Wirtschaft - sueddeutsche.de

Im Duell mit Konkurrent Oracle rüstet SAP auf: Der deutsche Softwarekonzern stemmt für knapp fünf Milliarden Euro die teuerste Übernahme seiner Geschichte.

Logistiek.nl - SAP koopt Business Objects voor 4,6 miljard

Logistiek.nl - SAP koopt Business Objects voor 4,6 miljard

FT.com / Companies / Europe - A new mantra to explain SAP purchase

FT.com / Companies / Europe - A new mantra to explain SAP purchase

A new mantra to explain SAP purchase
By Gerrit Wiesmann

Published: October 8 2007 20:20 | Last updated: October 8 2007 20:20

Having spent years stressing organic growth over the acquisitive strategy of arch-rival Oracle, the departure of German business-software maker SAP from its big corporate mantra proved surprisingly matter-of-fact.

But, as so often with Henning Kagermann, chief executive of the world’s largest maker of business software, it was not so much that he was changing tack – the world was at last beginning to understand things he said all along.

The €4.8bn ($6.7bn) agreed takeover offer for Franco-American software group Business Objects was entirely consistent with SAP’s goals to grow in three sectors, Mr Kagermann said in Frankfurt.

Organic growth was – and would remain – the mantra for the two areas that had been the focus of attention for the past four years: revamping the software backbone that all companies need, and luring smaller businesses.

In both areas, buying other companies made no sense because SAP was a clear market leader and so confident about its technological leadership that it saw no need for any outside help, SAP’s chief executive explained.

But, apparently forgotten by everyone, except Mr Kagermann, was SAP’s third ambition: to diversify from supplying software backbones, so-called business-process platforms, to selling programmes for end-users. And this, Mr Kagermann implied, had al­ways been a very different pro­position. So-called “business user solutions are very different”, he said, noting that this market is growing and consolidating extremely quickly.

“We have some innovation and know-how [in this field], but we have to accept that there are other [market] leaders,” he said, noting a slew of smallish companies that had long focused on addressing specialised user needs.

“People expect us to embrace the latest and coolest technology,” Mr Kagermann said. That’s why SAP decided it would be better quickly to buy in potential big sellers rather than start time-consuming development.

One of these is compiling and sifting through corporate data to improve performance. According to SAP, Business Objects is the clearleader in this market with annual sales of €10bn and yearly growth of 10 per cent.

Mr Kagermann said adverse reaction by investors – SAP stock fell 4 per cent to €39.95 – had more to do with the fact that “the market is not educated” than with any inconsistency at SAP. It would in time come around.

SAP had in past years al­ready bought software makers Virsa and OutlookSoft to offer its customers, respectively, in­tegrated programmes to check legal compliance and assess corporate performance. But in spending $200m on OutlookSoft, for example, SAP long made these moves look part of a pocket-money fin­anced sideshow that would not lay claim to corporate res­ources to any noticeable extent.

Having announced a deal 34 times bigger than the OulookSoft move this spring, Mr Kagermann strongly hinted that the time of trifling “fill-in acquisitions” had ended, presaging fill-in purchases easily above the billion mark.

SAP had proven it could grow organically and that it could innovate. “Now we are on our way to proving that we can make larger acquisitions,” he said, declining to name what fields are next.

“There are other areas in which such a move would make sense,” Mr Kagermann said, noting that ever more companies wanted integrated software “But [the acquisition of Business Objects] is by far the most important.”

Copyright The Financial Times Limited 2007

FT.com / Companies / Europe - SAP signals hunger for deals

FT.com / Companies / Europe - SAP signals hunger for deals

SAP signals hunger for deals
By Gerrit Wiesmann in Frankfurt and Pan Kwan Yuk in Paris

Published: October 8 2007 20:20 | Last updated: October 8 2007 20:20

Germany’s SAP, the world’s largest maker of business software, Monday signalled it could look at further acquisitions even as its departure from an avowed strategy of organic growth sent investors running for cover.

Outlining an agreed takeover offer worth €4.8bn ($6.7bn) for Franco-American software house Business Objects, SAP chief executive Henning Kagermann said SAP was on its “way to proving we can make larger acquisitions”.

The company’s announcement late Sunday that it was buying the market leader in programmes to collect and sift corporate data knocked 4 per cent of SAP stock in trading Monday.

The shares closed at €39.95 in Frankfurt.

Investors were rattled because Mr Kagermann had for years underlined SAP’s superiority to US rival Oracle by pointing out the German company was focused on organic growth – not dealmaking.

To catch SAP, Oracle has spent billions on buying rival makers of central business programmes as well as end-user suppliers such as Hyperion, a Business Objects rival, it bought for $3.3bn (€2.3bn) this spring.

But at a press conference in Frankfurt, Mr Kagermann said the largest acquisition in SAP’s history was not a reaction to Oracle.

“We have not seen … that Oracle is gaining market share,” he stressed.

He said the move was consistent with SAP’s strategy outlined as far back as 2003. Having “done our homework” in its two core sectors, which would still grow organically, SAP now had time to look at end-users’ needs.

As demand for traditional manufacturing and supply-chain management slows, SAP said that sales of business analysis software were growing at around 10 per cent per year from current annual sales of about €10bn.

In buying Business Objects, SAP would be able to offer its clients more integrated features, Mr Kagermann said, stressing that demand for such end-user features would likely continue to rise over the next years.

“There are other areas in which such a move would make sense,” Mr Kagermann said, noting that ever more companies wanted integrated software. “But [the acquisition of Business Objects] is by far the most important.”

SAP has spent the past years reinventing its so-called business process platform, the nervous systems of companies’ IT systems, and making a foray into the market for mid-sized companies, which critics argue came late.

Copyright The Financial Times Limited 2007

FT.com / Companies / IT - SAP buys Business Objects for €4.8bn

FT.com / Companies / IT - SAP buys Business Objects for €4.8bn

SAP buys Business Objects for €4.8bn
By Gerrit Wiesmann in Frankfurt and Lina Saigol in London

Published: October 7 2007 21:55 | Last updated: October 8 2007 00:07

Germany’s SAP on Sunday night launched a €4.8bn (£3.3bn) bid for Franco-American software maker Business Objects in what seems a departure from its long-term strategy to expand only organically and by smaller purchases.

The world’s largest maker of business software said it would offer €42 a share for the company, which specialises in business-analysis packages; a 20 per cent premium to Friday’s closing price in Paris.

The decision was seen as a response by SAP to a purchase by Oracle, its US archrival, which in March bought Hyperion, a smaller rival of Business Objects, for $3.3bn (£1.6bn).

SAP denied its agreed bid was a change of tack. Henning Kagermann, chief executive, said the company had bought interesting applications with “end-user appeal” before. SAP would continue to expand its core business organically.

In a conference call, he said that was consistent with SAP’s 2003 strategy statement. After changes to the main software platform, SAP was looking at individual applications.

Mr Kagermann said this opportunity to combine “market leaders in their respective domains” was “an opportunity unparalleled” in the German group’s history. He declined to give details of new products.

SAP said the move, financed by cash and debt, would go through if supported by 50.01 per cent of Business Objects’ shareholders. It hopes to close the transaction in the first quarter of next year.

The deal would mildly dilute earnings in the coming year, but boost profits in 2009 and beyond. “Financially and not just strategically, this is a good deal,” Mr Kagermann said.

It comes at a sensitive time for the German software maker. It is spending €400m to introduce software for small businesses, which will, for the first time, be hosted on the web by its own computer centres.

Copyright The Financial Times Limited 2007