SAP has acquired cloud-based management software firm Concur in a deal worth more than $8bn, in a bid to bolster its cloud services.
SAP revealed that it offered Concur $129 per share for the company, a 20 percent premium over the closing share value as of 17 September.
With 57 million shares outstanding, the offer for Concur was valued at $7.3bn. When debt is added the number reaches $8.3bn, which SAP will pay for the company when the deal closes towards the end of this year or in early 2015.
Once the deal is completed, SAP will have access to Concur's specialist software-as-a-service (SaaS) platform, which enables business users to manage their corporate travel spending and expenses via a cloud-based service.
The acquisition will help expand SAP's business network into the corporate travel industry, which it claims is worth over $1tn.
Dependent on how revenue is measured, the deal will make the combination of SAP and Concur the second-largest cloud vendor in the world. Combined, the two companies have more than 50 million cloud users.
Bill McDermott, SAP's chief executive, said the deal for Concur will allow SAP to broaden its service offerings to the enterprise sector. "The acquisition of Concur is consistent with our relentless focus on the business network," he said.
McDermott went on to explain how Concur will be used with SAP HANA to scale both SAP and Concur services.
Commenting on the Concur purchase, Andrew Bartels, principal analyst at Forrester, told V3 that the move by SAP was unsurprising and should significantly bolster its cloud income.
“SAP needs to make acquisitions to grow its SaaS revenues, because its organic SaaS products are small and not growing rapidly," he said.
"The addition of Concur's projected 2014 revenues of $700m, will almost double SAP's SaaS revenues, which we project will be $1.04bn in calendar 2014.”
SAP hopes its HANA platform will help extend the reach of Concur's spend and expense services particularly as the majority of SAP customers do not currently use Concur, presenting a clear path for the company to expand its user base.
Further details of the deal, such as how SAP will integrate Concur into its business, were not revealed, despite V3's requests for more information.
Having reported healthy cloud revenues this year, it is clear that SAP is keen to push deeper and broader into the cloud services market, driving such expansion through acquisitions of other cloud-centric businesses.
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