SAP to add Sybase's mobile platform, database business

SAP will buy Sybase for $5.8 billion adding in-memory technology and mobility to its applications business.

SAP today has reached an agreement to acquire partner and mobile platform provider Sybase in a deal for roughly $5.8 billion.

Under the agreement, SAP will purchase all outstanding shares of Sybase at a price of $65 per share. Sybase stock soared late yesterday on rumors of the deal.

SAP already has a relationship with Sybase, partnering with it in 2009 to bring its Business Suite to the iPhone and Blackberry and followed through with that partnership in March of this year when SAP brought its CRM application to the iPhone and Windows Mobile. Versions for RIM and Google's Android system will be available within the next year.

"For customers, the powerful combination of SAP Sybase will help companies better handle the explosion of data," said Jim McDermott, SAP's new co-CEO in a call with industry and financial analysts and press. "This will literally connect the shop floor to the corner office, unlocking substantial business agility."

The announcement comes ahead of SAP's annual user conference being held next week in joint locations in Frankfurt and Orlando, where SAP is expected to focus heavily on mobile applications and its in-memory database. Today's acquisition fits squarely with both ambitions. SAP co-founder and board member Hasso Plattner has been publicly pushing SAP's plans for in-memory databases in recent years, devoting a keynote to the subject at last year's Sapphire event and staging a video interview with himself about SAP's in-memory plans.

While SAP had a previous relationship with RIM to deliver SAP CRM on the BlackBerry, it switched approaches and partnered with Sybase thanks in large part to the fact that so many of its customers found themselves supporting multiple devices.

"We want to make sure SAP's applications can be accessed from all leading devices," said Jim Hagemann Snabe, SAP co-CEO. "This will allow us to do that much faster with much less complexity. A key in the acquisition for SAP is Sybase's heterogeneous platform that is device independent. Therefore with this acquisition we remain database platform and device agnostic."

SAP also touted the opportunity for its partners, but what the deal means for existing mobile partnerships remains to be seen.

"This acquisition will also expand the opportunity for our joint ecosystems partners," McDermott added. "Partners can innovate on Sybase's open and market-leading platform."

While SAP executives focused much of their remarks on mobility, many of the questions on yesterday's call centered around Sybase's database business. It has about 10,000 enterprise customers around world in its database business and more than 2,500 customers using column oriented analytics servers, according to Sybase CEO John Chen. The database business is built on strengths in some very particular areas, including 18% share in the database market in China.

It remains to be determined what effect the acquisition of Sybase will mean for traditional relational database vendors like Oracle and IBM. SAP executives maintained the same company line they have been repeating since Oracle bought hardware giant Sun Microsystems that they "do not want to own the stack."

"It's very important to make a clear statement that we fundamentally don't believe in buying the entire stack," Snabe said. "We believe in choices for customers and focusing on layers of the stack."

As SAP did with its acquisition of Business Objects Sybase will remain a separate company with its own executive leadership.

"We believe the acquisition of Sybase will be even easier to do as we will run the business as a wholly-owned subsidiary of the SAP group."

The per share purchase price represents a 44% premium over the three-month average stock price of Sybase. The transaction will be funded from SAP's cash on hand and a EUR2.75 billion loan facility arranged and underwritten by Barclays Capital and Deutsche Bank.

The transaction is expected to close in July of this year.

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