Cloud Premiums Fall in SAP's $4.3B Deal for Ariba
SAP is targeting Ariba's enterprise and procurement trading network that connects and automates more than $319 billion in virtual commercial transactions among 730,000 companies. "Already today 63% of the world's transaction revenue touches an SAP system. SAP and Ariba will facilitate collaborative commerce within and between companies of all sizes," SAP said.
Ariba shares rose over 19% to $44.78 in Tuesday trading after the deal was announced, while SAP shares fell less than 1% to $58.69. The deal is expected to close in the third quarter.
Late in 2011, SAP and IBM both paid over 50% premiums to buy up cloud businesses like SuccessFactors(SFSF) and DemandTec, respectively, fanning speculation of a M&A boom for cloud assets.
However, after those deals some analysts cautioned that premiums for cloud companies were set to fall as competition intensified. For some, Oracle's February acquisition of cloud-based HR management systems provider Taleo(TLEO) at a sub-20% premium solidified the notion that competition in the sector was ratcheting up and premiums were falling.