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