SAP has agreed a $5.8 billion cash deal to buy database outfit Sybase in a move the German giant says will help it deliver its technology over mobile phones.
The firms have inked a definitive merger agreement that will see SAP offer $65 a share, a 44% premium over the three-month average stock price of Sybase. The transaction will be funded from SAP's cash on hand and a EUR2.75 billion loan facility arranged and underwritten by Barclays Capital and Deutsche Bank.
Founded in 1984, California-based Sybase has a strong financial services customer base for its database and mobile technology. The vendor claims 24 of the top 25 global banks rely on it to deliver intra-day risk analysis.
Recently the company has also made aggressive moves into the complex event processing (CEP) market. Last year it launched its own CEP engine using source code licensed from San Francisco-based Coral8 and this was followed by the acquisition of Aleri.
SAP says the acquisition provides it with key technology that enables it to deliver its software over smartphones. This will gain it new business and "unlock significant business value out of existing customer investments", claims the vendor.
The buyer and its customers will also be able to tap into Sybase's messaging network to reach four billion mobile subscribers through over 850 operator relationships worldwide, engaging their clients via alerts, transactions and promotions on their handsets.
In addition, SAP says the CEP expertise it is acquiring - initially built in the financial sector - will be marketed to customers in other industries and product areas.
For Sybase, SAP in-memory technology will provide the opportunity for dramatic performance improvements to its analytic processing capabilities, say the firms.
Under the agreement, Sybase will operate as a standalone business, called Sybase, an SAP company, with its current management team kept in place, with founder John Chen joining the SAP executive board.
The deal, already unanimously approved by the Sybase board, is expected to close in the third quarter and will be immediately accretive to SAP's earnings per share on a non-IFRS adjusted basis.
Bill McDermott, co-CEO, SAP, says: "With this transaction, SAP will dramatically expand its addressable market by making available its market-leading solutions to hundreds of millions of mobile users, combining the world's best business software with the world's most powerful mobile infrastructure platform."