When deals like this happen, you know for sure that wars are all about the money.
On May 22, 2012, with SAP agreeing to acquire Ariba (a zero-debt company) for an EV (enterprise value) of $4.3bn, it's paying $45 /share, at a premium of ~20% more than Ariba's May 21 trading price. SAP plans to fund this transaction from free cash on its balance sheet and a $3.1bn term loan facility
This is a landmark deal primarily because:
- After Amazon, Ariba is the world's 2nd largest cloud vendor
- Ariba has the largest global trading network and drives a massive $319bn of commerce transactions b/w 730,000 companies (Ariba will add tremendous value to SAP, when SAP already is in a position where 63% of the world's transaction revenues touch an SAP system)
- With this deal, SAP is headed to become the leader in SRM (Supplier Relationship Management)
- Ariba has grown at 39% yoy in revenues in 2011 ($444mm)
With this deal, it's taking on prime competition, Oracle, big time.
For that matter, Oracle's acquisitions have also involved huge money - and not to discount, really strategic buys. Last year, it acquired cloud-based talent management company Taleo and CRM provider RightNow for $1.9bn and $1.43bn respectively - gigantic!
And here's the fun part - On May 23, 2011 - just a day after SAP's Ariba acquisition, Oracle announced a $300mm acquisition of Vitrue ("We help brands amplify their social message").
Nothing immediate happened to Oracle's stocks. Vitrue is a cool company though - privately held and backed by the likes of General Catalyst Partners, Comcast Ventures, Dace, Scale, Turner Broadcasting System and Advent - and has raised $33mm in 4 rounds of venture funding.
It'll be an interesting battle to witness
Cheers,
AJ
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