SAP Acquires Ariba To Improve Cloud Credentials

SAP is gaining entry into the fast-growing collaboration technology market with the acquisition of Ariba for $4.3 billion (£2.7bn).

SAP America, the US subsidiary of the German enterprise software giant SAP AG, made the deal to acquire Ariba at $45 (£28) a share, which is a 20 percent premium over the $37.64 (£23.75) closing price of Ariba’s stock on 21 May, the day before the acquisition  was announced.

Ariba, which has 2,600 employees and is based in Sunnyvale, Calif., recorded $444 million (£280m) in revenue in 2011, a 38.5 percent jump over 2010.

Collaborative Move

Ariba sells cloud-based collaborative commerce applications used primarily in business-to-business environments. The acquisition comes one week after SAP rolled out a series of cloud-based applications at a conference in Orlando, Florida, tied to its acquisition of SuccessFactors, a maker of cloud-based human resources software, in February.

“SAP’s entry into the inter-enterprise business network space significantly expands its growth opportunities and accelerates its momentum in the cloud,” SAP stated in a news release.

Cloud-based collaboration software is a growing market as companies look for ways to keep in close touch with employees, partners and others increasingly scattered around the globe.

Collaboration tools also include Voice over IP (VoIP) telephony, e-mail, instant messaging and videoconferencing features, collectively called unified communications technology. Microsoft Lync, for example, is a widely used UC platform. Likewise, Microsoft SharePoint is a Web application platform for collaboration, enabling document sharing and editing via the cloud.

Big Market

SAP said that industry experts estimate the size of the cloud-based enterprise network and procurement segment, in which Ariba operates, at $5 billion (£4bn) in revenue and that the Ariba network is the largest and most global trading network in the space, connecting and automating more than $319 billion (£201bn) in commerce transactions.

“In our personal lives, networks are playing an increasingly important role in how we connect, share, and shop–bringing more insight and efficiency into everything we do,” said Bob Calderoni, CEO of Ariba, in a statement. “Businesses are looking for the same connectedness, insight, and efficiencies in the processes and collaboration with customers, suppliers and partners beyond the walls of their companies.”

Ariba and its customers will also benefit from the capabilities of SAP’s HANA platform, which delivers enterprise applications from an in-memory-designed platform that offers faster performance than data retrieved from disk storage. New HANA-based apps were also introduced at the conference in Florida.

The Ariba acquisition is expected to close in the third quarter of this year, SAP said.

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