SAP reaches for sky with cloud computing
German software giant SAP is hoping to improve its position in cloud computing with the acquisition of US web-based software company SuccessFactors.
SAP will pay $40 per share, a premium of 52 percent on the closing price in trading in New York on Friday. The $3.4 billion (€2.5 billion) deal should help the German company catch up on cloud computing, the rapidly growing sector where data and processes are hosted remotely on the Internet.
The California-based SuccessFactors produces software used by companies to review employee performance. The company, which was founded in 2001, has more than 3,500 customers and a total of 15 million paying users.
"While our growth remains primarily organic, where we can innovate faster with acquisitions, we take action. In this case, to become a cloud powerhouse," SAP co-CEO Bill McDermott told journalists and analysts on Saturday.
"By acquiring SuccessFactors, SAP puts itself into a much stronger competitive position in human resources applications and reaffirms its commitment to software-as-a-service as a key business model," Paul Hamerman, an analyst at technology research group Forrester, told Reuters.
Forrester estimates the cloud computing market will grow from $40.7 billion in 2011 to more than $241 billion in 2020.