SAP To Acquire Cloud Application Vendor SuccessFactors In $3.4-Billion Deal

SAP said Saturday that it signed a definitive agreement with publicly held SuccessFactors to pay $40 per share in cash for all of its outstanding stock, putting the total purchase price at $3.4 billion. SuccessFactors, meanwhile, expects to earn approximately $330 million in revenue -- 10 times less than the purchase price. SAP said the offered share price represented a 52-percent premium over the stock's Dec. 2 closing price. The SuccessFactors' board of directors has approved the deal and the two companies expect to complete in the first quarter of 2012. The acquisition, which also requires approval from relevant regulatory authorities, is being carried out by SAP America Inc., the Waldorf, Germany-based company's U.S. subsidiary.

Once the acquisition is complete San Mateo, Calif.-based SuccessFactors and its 1,450 employees will continue to operate as an independent subsidiary, SAP said. SuccessFactors CEO Lars Dalgaard will remain in that post and also will take on the job of leading SAP's cloud business.

SuccessFactors develops and sells a broad range of human resource management applications for workforce planning, recruiting, employee career and development, compensation management, employee training, and employee performance management and reviews.

SuccessFactors has more than 3,500 customers with some 15 million subscribers for its multi-tenant, cloud-based applications. The company reported 77 percent year-over-year growth for its recently completed third quarter and 59 percent growth for the first nine months of 2011.

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SAP said in a statement that the acquisition will expand the company's cloud application portfolio and marks another step in the company's strategy of delivering applications for on-premise, cloud and mobile computing. SuccessFactors applications are "highly complementary" to SAP's core HCM software, the company said, and to its other cloud offerings such as its SAP Business ByDesign cloud suite and SAP Sales on Demand.

"The cloud is a core of SAP’s future growth, and the combination of SuccessFactors' leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent," said Bill McDermott, SAP co-CEO, in the statement. "Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud."

SAP has scheduled a conference call for Monday morning to provide more details about the acquisition.