Microsoft owns up to SAP merger talks

Microsoft has confirmed that it initiated merger talks with CRM giant SAP last year.

But the deal was abandoned a few months ago because the transaction and subsequent integration of SAP was considered too complex to pursue.

"After the merger talks ended, [Microsoft and SAP] continued other discussions that resulted in a deepened relationship on web services, and a patent cross-licensing agreement," said Microsoft in a statement. "There are no intentions to resume these talks."

Henning Kagermann, chief executive of SAP, said in a statement: "SAP, like all publicly held corporations, routinely evaluates potential opportunities to strengthen its leading position in the enterprise software market, and the disclosure made today should be interpreted in this way."

Details of the discussions emerged during the pre-trial discovery process as part of the US Department of Justice's attempts to block software giant Oracle's proposed takeover of rival PeopleSoft.

The DoJ has argued that an Oracle/PeopleSoft merger would mean only two rivals in its particular market - Oracle and SAP - and that this could drive up software prices.

Oracle disputes the DoJ's definition, arguing that Microsoft, Siebel and smaller vendors should be included in the definition, as well as PeopleSoft, SAP and Oracle.