Sap strengthens cloud biz with $4.3 bn Ariba buy

MUMBAI: Sap America, a subsidiary of Sap AG, has entered into an agreement to acquire Ariba, the leading cloud-based business commerce network, for enterprise value of approximately $4.3 billion.

The acquisition will combine Ariba’s successful buyer-seller collaboration network with SAP’s broad customer base and deep business process expertise to create new models for business-to-business collaboration in the cloud.

The transaction will be funded from Sap’s free cash and a €2.4 billion term loan facility. The transaction is expected to close in the third quarter of calendar year 2012, subject to Ariba stockholder approval, clearances by relevant regulatory authorities and other customary closing conditions.

The transaction is expected to be accretive to Sap’s non-IFRS earnings per share in 2013.

With the addition of Ariba, SAP will acquire the leader in cloud-based collaborative business commerce. The acquisition establishes SAP as the leading business network, adding business-to-business collaboration to its existing solutions.

The move positions SAP in a fast-growing segment as buyers and sellers across the globe connect in new ways through the cloud.

Headquartered in Sunnyvale, California, Ariba has approximately 2,600 employees. The company is the leader in cloud-based collaborative commerce applications and the second-largest cloud vendor by revenue.

With $444 million in total revenue, Ariba experienced 38.5 per cent annual growth in 2011. Its business network recorded 62 percent organic growth in the same period.

“The cloud has profoundly changed the way people interact. The impact will be even greater as enterprises connect and collaborate in new ways with their global networks of customers and partners," said SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe.

"Cloud-based collaboration is redefining business network innovation, and we are catching this wave in the early stage of its evolution. The addition of Ariba will create the business network of the future, deliver immediate value to our customers and provide another solid engine for driving SAP’s growth in the cloud."

Upon completion of the transaction, it is planned to consolidate all cloud-related supplier assets of SAP under Ariba.The existing management team will continue to lead Ariba, which will operate as an independent business under the name Ariba, a Sap company.

The SAP Executive Board intends to nominate Ariba CEO Bob Calderoni to the SAP Global Managing Board after closing of the transaction and subject

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