SAP AG, the world’s biggest maker of business-management software, agreed to acquire Sybase Inc. in a transaction valued at $5.8 billion to help it fend off competition from Oracle Corp.
Sybase shareholders will receive $65 a share, Walldorf, Germany-based SAP said in a statement today. That is 56 percent higher than the closing price of $41.57 yesterday, before the deal discussions became public.
SAP co-Chief Executive Officers Bill McDermott and Jim Hagemann Snabe are on the lookout for acquisitions to keep from losing customers to Oracle and reverse the sales declines that led to the February departure of their predecessor, Leo Apotheker. Sybase gives its new owner software that helps financial institutions analyze information.
“The deal makes sense because SAP is betting heavily on in-memory computing and mobile applications as the future of computing and Sybase brings to the table a capability for high- speed in-memory databases and a mobile application platform,” said Paul Hamerman, vice president of enterprise applications at Forrester Research in Cambridge, Massachusetts.
Apotheker presided over the first annual drop in revenue at the company since 2003 as customers facing the economic slump refrained from purchasing new software. Oracle in December said it is winning customers at SAP’s expense. SAP’s software is used for payrolls and customer relations management.
Sybase, which is based in Dublin, California, soared 35 percent to $56.14 at 4 p.m. on the New York Stock Exchange. That was its biggest one-day gain since the company sold shares to the public in 1991.
McDermott said in an interview with Bloomberg Television yesterday that he wouldn’t hesitate to make acquisitions if the opportunity was right. As the amount of data generated by businesses doubles every 18 months, companies need the ability to analyze it and make rapid decisions, McDermott said.
Sybase will help SAP better provide in-memory databases and software used in mobile computing and services delivered via the Internet, Ray Wang, an analyst at the Altimeter Group, said in an interview.
“This acquisition is a technology play, and Sybase has three of the most innovative technologies required for the next decade,” Wang said.
In the software industry, 1,057 deals have been announced in the last 12 months, with an average premium of 47 percent. The purchase of Sybase is the fifth-largest software takeover ever, according to Bloomberg data.
The transaction is expected to close during the third quarter, SAP said in the statement.