Amdocs: SAP Could Be A Possible Buyer

Floating what would be a potentially dramatic acquisition, FTN Midwest Securities analyst Doug Ashton asserted in a research note yesterday that he is “hearing about a potential blockbuster” deal in which SAP (SAP) would acquire Amdocs (DOX), a $7.6 billion market cap company which provides customer management software systems to the telecom and cable sectors.

Ashton asserts that the combination makes sense.

Amdocs has been actively consolidating the space, doing the dirty work for vendors that are interested but currently only peripherally touch on the [telecom] vertical. Amdocs has a huge installed base and a ton of integration work ahead. There is really no second player left to be had and [a recent] alliance with IBM (IBM) may have woken up the sector to the fact. We believe IBM’s approach may have been too cautious and while there are few that could digest Amdocs, both SAP and IBM are among them. The timing, created in part by the alliance, seems to be right and Amdocs' ongoing success will eventually be an issue. There are not a ton of large deals out there anymore and few customers that they don’t have that are winnable.

For Amdocs, he concludes, it is “a smart time to exit.”

Amdocs yesterday was up 45 cents at $36.47; SAP was down 49 cents at $45.18.

DOX vs. SAP 1-yr chart