SAP buys expenses software maker Concur for $7.3 billion

Fri Sep 19, 2014 1:39pm EDT
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By Harro Ten Wolde

FRANKFURT (Reuters) - Germany's SAP (SAPG.DE: Quote) has agreed to buy U.S. expenses software maker Concur CNQR.O for $7.3 billion in cash, strengthening its position in cloud computing, an area it long hoped to avoid until its momentum became too great to ignore.

SAP specializes in providing software for companies on their computing networks, but has come under pressure from cheaper rivals that offer services over the internet, or "the cloud".

By buying Concur, SAP is not only increasing its online products, but also believes it can capitalize on the U.S. firm's strength in the travel sector to sell additional software.

The German business software company said it would offer $129 per share for Concur, a 20 percent premium over the Sept. 17 closing price and just short of the $130.36 record high Concur shares set in January after a two-year upward run.

That is equal to the 20 percent premium SAP paid for its 2012 acquisition of cloud procurement software maker Ariba, and comparable with the 18 and 19 percent arch-rival Oracle ORCL.O paid for Taleo in 2012 and RightNow in 2011.

"It seems expensive. But we believe that Concur is the leader in its market and the potential synergies will be a valuable addition," Bernstein analysts wrote in a note.

SAP, which competes in cloud computing with global rivals including Oracle (ORCL.N: Quote), IBM (IBM.N: Quote) and Salesforce (CRM.N: Quote), will finance the Concur acquisition through a credit facility agreement of up to 7 billion euros ($9 billion).

After initially shunning the cloud, SAP began a series of acquisitions with the $3.4 billion purchase of SuccessFactors in 2011 as it responded to fast-growing internet software pioneers such as Salesforce and Workday (WDAY.N: Quote)   Continued...

Logo of German company SAP is pictured at the CeBit computer fair in Hanover, March, 6, 2012.  REUTERS/Fabian Bimmer