SAP to Acquire Sybase in All-Cash Deal Worth $5.8 Billion

�Takes on Oracle for Market Share in Corporate Database Space

By Michael Bogan
Beacon Contributing Writer

SAP AG (NYSE: SAP) announced after the market close Wednesday in New York it will by Dublin, Calif.-based Sybase Incorporated (NYSE: SY) in an all-cash deal of $65 per share of Sybase common stock.

Shares of Sybase rocketed $14.57 on the news to close at $56.14, a 35 per cent gain on heavy volume of 28.9 million shares.

The acquisition follows the abrupt resignation of SAP CEO Leo Apotheker in February, and is the first major decision of new co-CEOs Bill McDermott and Jim Hegemann in the company’s battle with database sector leader Oracle Corporation. Analysts cite mounting concerns over SAP’s earnings and lagging competitive position in the database market led to the Apotheker resignation.

With the acquisition of Sybase, SAP’s war for share in the corporate database software market is expected to intensify as the business Sybase brings to SAP adds more direct product line competition with Oracle.

Til now, Walldorf, Germany-based SAP has developed applications in-house on its road to becoming the world’s leader business-software maker. It’s rarely had to pay a premium to enter a market.
SAP’s previous significant acquisition was the purchase of business-intelligence software maker Business Objects of France in 2008 for $6.8 billion.

Oracle, on the other hand, has gained meaningful share in SAP’s primary market along with other markets through acquisitions beginning in 2004, totaling more than $40 billion.

Database applications store information for companies to retrieve later, a primary business Oracle leads with more than 40 per cent market share worldwide. Sybase holds only 3 per cent of the market for database application, a market SAP can begin to compete directly with powerhouse Oracle if SAP’s acquisition of Sybase finalizes.

In addition, the acquisition of Sybase gives SAP valuable technology in the rapidly growing mobile device business-software market. SAP said corporate database applications that run on smartphones is technically difficult and will be more easily developed with the acquisition of Sybase.

Moreover, Sybase’s network of more than 4 billion mobile interconnected subscribers come with the acquisition of Sybase.

SAP co-CEO McDermott called the acquisition a “game-changing transaction� which synergizes �the world’s best business software with the world’s most powerful mobile infrastructure platform.�

SAP said it expects the acquisition to complete during the third quarter contingent upon approval from the regulators in Europe and the US. SAP also said Sybase earnings will be fully accretive immediately following final execution of the deal.