SAP to Acquire Business Objects for $6.78 Billion

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Includes: BOBJ, SAP
by: Judith Levy

German enterprise software manufacturer SAP AG said Sunday that it has agreed to purchase Business Objects SA, a French manufacturer of software that tracks corporate databases, for €4.8 billion ($6.78 billion). This will be SAP's biggest-ever acquisition. SAP will pay €42.00 ($59.35) in cash per share of Business Objects, a 20% premium to the shares' Friday close. "Together, SAP and Business Objects intend to offer high-value solutions for process- and business-oriented professionals," the companies said in a joint statement. The transaction has been approved by the Business Objects board and is expected to close in Q1 2008. The acquisition marks a strategic shift for SAP, which had previously opted for organic growth while rival Oracle went on a buying spree: Oracle has spent $25 billion on acquisitions since 2004. "The acquisition of Business Objects is in keeping with SAP's stated strategy to double our addressable market by 2010" to reach 100,000 clients, said SAP CEO Henning Kagermann. "It's the unique combination of two market leaders." In related news, SAP shares fell in early morning trading Monday after Business Objects issued a profit warning. The company is forecasting a Q3 profit of $0.36-0.39 per share, below prior analyst expectations of $0.51. Q3 revenue is now projected at $366-370 million, shy of analyst estimates of $385.1 million.

Sources: Bloomberg, Dow Jones, Reuters, Wall Street Journal, Forbes
Commentary: Business Objects Looks to Sell Itself - Le FigaroBusiness Objects Adopts The “Best-of-Breed” ApproachBusiness Objects Looks Great
Stocks/ETFs to watch: SAP, BOBJ. Competitors: COGN, MSTR, ORCL, MSFT. ETFs: SWH, DBT, EWG
Earnings call transcripts: SAP Q2 2007, Business Objects Q2 2007

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