SAP Buys SuccessFactors for $3.4B to Accelerate Cloud Push
SAP made the surprise announcement over the weekend that it had acquired human capital management (HCM) SaaS vendor and Talkin’ Cloud Stocks Index member SuccessFactors for $3.4 billion, or $40 per share, as it accelerates its cloud push. Between SuccessFactors’ technology in the cloud and SAP’s legacy on-premises offerings, the database giant is hoping to provide and end-to-end business process management ecosystem.
Intriguingly, that $40 per share SAP paid represents a 52 percent premium per share on top of SuccessFactors’ Dec. 2, 2011, closing price (and make sure you check out our weekly Talkin’ Cloud Stocks Index update for more insight on that front). It seems clear that SAP really wants SuccessFactors (due in no small part to its 77 percent year-over-year revenue growth), and SuccessFactors’ board of directors has already approved the transaction, according to the press release.
Jim Hagemann Snabe, Co-CEO of SAP, laid out his vision for how SuccessFactors will fit into their ecosystem in a prepared statement:
“The depth and experience that SAP brings to customers via our cloud and on-premise portfolio fit elegantly with SuccessFactors’ world-class expertise in providing high-performing, low-cost, native cloud applications that customers are passionate about. Together, we will lead the industry in providing end-to-end solutions consistently to meet any deployment preference, whether on premise, in the cloud or on device.”
Currently, SuccessFactors claims more than 15 million subscription seats across 3,500 customers of various sizes, all of whom SAP will continue to support after the acquisition finalizes. Similarly, it sounds as though SAP will keep most of SuccessFactors’ 1,450-strong employees on board — while SuccessFactors CEO Lars Dalgaard will take over the reins at SAP’s cloud division. It seems SAP is looking at SuccessFactors technology to complement, not supplant, its existing cloud offerings.
There’s no word on exactly when SAP expects the deal to finalize to create “SuccessFactors, an SAP company.” But we’ll keep watching for more clues.
And in the meantime, this is obviously a shot across the bow at SAP rival Oracle, which has been promoting its Oracle Public Cloud to the same customers that SuccessFactors will enable SAP to go after. Not to mention that Oracle made its own cloud acquisition in the form of RightNow only very recently. It’s going to be extremely interesting to see how the House of Ellison replies.