BUSINESS
SAP snaps up Business Objects
08-10-2007
by Emmet Ryan
Business software giant SAP is to buy its rival Business Objects in a EUR4.8 billion deal, but the market is wary of the impact the takeover may have.
The deal, which was announced on Sunday, has seen shares in SAP fall as Paris-based Business Objects issued a profit warning in a separate announcement on Sunday.
Business Objects said it expects a third-quarter profit of between USD0.36 and USD0.39 per share, well below analyst projections of USD0.51. Shares in SAP reached a month-long low early on Monday morning following the announcement, dropping to EUR39.77 on the DAX before rebounding slightly to EUR39.86.
Despite the poor response from the market, the German firm's management said the deal would be beneficial to SAP.
"We are highly committed to the next generation of applications serving business users. The combination of SAP and Business Objects in their respective domains will benefit customers, prospects, partners, employees and shareholders," said Henning Kagermann, chief executive of SAP.
"The acquisition of Business Objects is in keeping with SAP's stated strategy to double our addressable market by 2010 as announced in 2005," said Kagermann. "SAP will accelerate its growth in the business user segment, while complementing the company's successful organic growth strategy."
Business Objects' main focus is on the business intelligence software market. The firm believes the takeover will aid its efforts to deliver its products in this field to more customers.
"Business Objects helps companies transform the way they work through the use of intelligent information. The combination of Business Objects and SAP means that we can truly amplify the reach of business intelligence," said Bernard Liautaud, chairman and founder of Business Objects.
Liautaud will become a member of SAP's supervisory board at the company's next shareholder meeting. When the transaction is complete, John Schwarz will continue as the chief executive of Business Objects and will likely become a member of the SAP Executive Board. Doug Merritt, corporate officer for the business user branch of SAP, will join Business Objects and report to Schwarz.
SAP employs 640 people in Ireland split between offices in Dublin and Galway.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 