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Germany's SAP buys SuccessFactors for $3.4 bln, shares soar over 50%

5th Dec 2011, 11:25 am by Brad Lemaire
Germany's SAP buys SuccessFactors for $3.4 bln, shares soar over 50%

SuccessFactors’ (NYSE:SFSF) stock soared above 50 percent on Monday after the company announced it agreed to be purchased by German software company SAP AG in a deal valued at $3.4 billion.   

The San Mateo, California-based company gained 51.73 percent to reach $39.83 a share today, after the opening bell in New York.

According to the deal, SAP America, a unit of SAP AG, will pay $40 per share in cash to SuccesFactors. That is a 52 percent premium from the company’s closing Friday price of $26.25.

SuccessFactors board has unanimously approved the deal.

SAP America chief executive Bill McDermott said: "The cloud is a core of SAP's future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse."

The combination of SAP and SuccessFactors will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.

SuccessFactors' founder and CEO Lars Dalgaard said: "This is a revolutionary combination of proven capabilities that allows SuccessFactors to accelerate our roadmap by 10 years, and bring the world's leading application knowledge and intellectual property to our customers through the cloud, and the largest applications customer base instantly."

SAP intends to fund the acquisition with cash on hand and a 1 billion euro (USD$1.34 billion) term loan facility.

In addition SAP also disclosed that the deal could help the software maker beat its 2015 revenues target of 20 billion euros by as much as 1 billion.

The deal, expected to close in the first quarter of next year, will hurt SAP’s earnings in 2012 but also be accretive in subsequent years.

Following the close of the deal, SuccessFactor said it would remain as an independent entity and be renamed "SuccessFactors an SAP company". Dalgaard will run the cloud business of SAP and be appointed to SAP’s executive board.

SuccessFactors makes cloud-based software specializing in human resources tasks. It focuses on apps designed for managing relationships with employees like organizing and developing performance re-views and bonuses.

SuccessFactors has more than 3,500 customers and 15 million subscribers in 168 countries.

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