SAP AG, the world’s largest maker of business-management software, held discussions within recent weeks to acquire Jive Software Inc., which has a market value of more than $1 billion, people familiar with the matter said.
SAP quit talks with Jive, which makes social-networking applications for businesses, after a thorough review of the company, said the people, who asked not to be named because the matter is private. SAP, based in Walldorf, Germany, decided Jive’s products overlapped too much with its own and wouldn’t add enough market share, one of the people said. SAP is a customer of Jive, according to Jive’s website.
Jive shares rose as much as 8.8 percent to $17.16 on the news, the most since November, to give the company a market valuation of about $1.1 billion.
Software companies are trying to foster client loyalty by integrating collaboration tools for employees reminiscent of Facebook Inc.’s social networking platform. SAP last year released its own tool, called Jam, that’s based on code garnered from its acquisition of SuccessFactors Inc. Forrester Research estimated in 2011 that the market for social enterprise software would grow about 60 percent a year and reach $6.4 billion by 2016.
“Investors may be thinking that SAP was not the only potential suitor with whom Jive was talking,” Michael Nemeroff, an analyst at Credit Suisse Group AG in New York, said in an e-mail. He rates Jive shares outperform with a $25 target price. “I think Oracle and IBM would like to own this.”
Oracle Corp. has bought online marketing companies including Eloqua Inc. and Vitrue Inc. International Business Machines Corp. last year bought Kenexa Corp., which lets businesses recruit workers through social media.
SAP spokesman Daniel Reinhardt declined to comment, as did Amanda Pires, a spokeswoman for Palo Alto, California-based Jive. Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, and James Sciales, a spokesman for Armonk, New York-based IBM, also had no comment.
Jive, which provides businesses with social-networking software that helps employees communicate and collaborate on projects, reported first-quarter revenue of $33.9 million. The company posted a net loss for the quarter of $16.6 million. Jive went public in December 2011, raising $161 million.
Last month, SAP said that sales of its new software licenses, an indicator of future revenue, had risen 3 percent to 657 million euros ($849 million), a significant slowdown from the 9 percent growth it posted the previous quarter.