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5/12/2010
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SAP Buys Sybase For $5.8 Billion

The deal establishes a new focus for the company and demonstrates the growing importance of mobile technology.

Business software giant SAP on Wednesday said it has signed a deal to buy database software maker Sybase for $5.8 billion.

The company said that it is offering a 44% premium over the three-month average stock price of Sybase, news that sent Sybase's stock up in after-hours trading. The after-hours impact on SAP's stock, however, showed less optimism about the deal: SAP's shares were down slightly following the announcement.

The acquisition will diversify SAP's product line, expanding its business intelligence and customer relationship management offerings into data management and analytics, particularly as related to mobile devices.

The deal closes a controversial chapter in the company's history when profits came from raising maintenance fees rather than from more compelling product offerings.

The CEO who presided over the company during this period, Leo Apotheker, resigned in February, leaving SAP in the hands of co-CEOs Jim Hagemann Snabe and Bill McDermott.

In a statement, McDermott stressed the importance of mobility to SAP, echoing similar sentiments he expressed during the company's Q1 conference call for investors last month.

"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," he said.

During last month's call, Hagemann Snabe also emphasized the importance of mobile technology. "Mobile devices are becoming the preferred interaction point with business applications," he said. "We want to make sure that SAP solutions can be accessed from all leading mobile platforms, like RIM, Nokia, Apple, Google Android, etc."

Gartner Research VP Yvonne Genovese said in a phone interview that SAP now has a strategy, something her organization had said the company was lacking. SAP, she said, clearly believes that mobility is the next desktop. "Sybase brings SAP mobility capabilities and mobility technology," she said.

She also said that the deal would help SAP market and manage in-memory database capabilities, which allow for the rapid processing of large amounts of information.

"There's an explosive growth in the amount of information we have access to," she explained. "That provides a huge opportunity to mine more information more actively. Business leaders want that kind of information to help them be more predictive."

Genovese said the deal could be good for the SAP if it's executed well, noting that the company's acquisition of Business Objects had not had a lot of market impact.

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