SAP Extends Offer For SuccessFactors While Government Entity Investigates

SAP has extended yet again the deadline for its offer to buy outstanding shares of cloud software developer SuccessFactors while a U.S. government organization investigates the proposed $3.4 billion acquisition.

The news comes after a SuccessFactors filing with the Securities and Exchange Commission disclosing that the Committee on Foreign Investment in the United States (CFIUS) had launched an investigation of the proposed acquisition. The CFIUS is a U.S. inter-agency committee charged with scrutinizing acquisitions of U.S. businesses by foreign companies for any potential impact on national security.

SAP and SuccessFactors announced a deal on Dec. 3 for SAP to acquire the developer of cloud-based human capital management for $40 per share or $3.4 billion. At the time the companies set a Jan. 18 deadline for SuccessFactors stockholders to tender their shares.

Last week SAP extended the deadline for the cash tender offer to Jan. 25. SAP at the time said it had yet to receive clearance from the CFIUS, although a spokesman said the committee had not given any indication that there was a problem with the proposed acquisition.

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SAP and SuccessFactors filed notice with the CFIUS of the planned acquisition on Dec. 22. CFIUS had 30 days to either inform the companies that there were no national security concerns and end the review or initiate an investigation, according to a SuccessFactors filing with the SEC on Jan. 19. The CFIUS then has 45 days to conduct an investigation if it so chooses.

In a new SEC filing on Jan. 23 SuccessFactors said that it and SAP had "received written notification from CFIUS that it would initiate such an investigation to complete its assessment." The filing said the 45-day period runs until March 5, though it's possible it could be completed sooner. "The decision by CFIUS to proceed with an investigation is not unusual," the filing said.

Yesterday the company extended the deadline for the tender share offer to 5:00 ET Feb. 1.

An SAP spokesman said the companies have all the other regulatory approvals needed for the acquisition and they "are working with the [CFIUS] and hoping we can complete the investigation quickly."

SAP is counting on the acquisition to help it expand its lineup of cloud-based applications and, as described by SAP co-CEO Bill McDermott, bring more "cloud DNA" to the giant software company.