SAP America announced that it is acquiring SuccessFactors this week for US$3.4 billion in cash.
In order to boost its cloud strategy, SAP executives expressed their zeal over the boost that this acquisition will bring to the business. SuccessFactors provides cloud-based human capital management tools that is “highly complementary” to SAP’s offerings like the Business ByDesign, HCM offerings and other business cloud services from SAP according to a statement released by the company.
SAP executives mentioned that the deal is expected to close around first quarter of next year after undergoing all regulatory approvals needed. They added that SuccessFactors was valued at $40 per share which is a premium of 52 percent from SuccessFactors’ closing share price on December 2.
Founder and CEO Lars Dalgaard of SuccessFactors will lead the cloud business joining in SAP but he will still remain head of California-based SuccessFactors. SAP said that the firm along with its over 1450 employees would still operate as an independent entity.
Co-CEO of SAP Bill McDermott said that acquiring SuccessFactors would act like an “adrenaline shot” for their cloud business. He mentioned that the combination of both companies would enable them to manage both “people and talent” which is a global top priority for CEOs. He added that “Lars is the best leader” when it comes to the cloud software business. On the other hand, Dalgaard mentioned that SAP shares his company’s cloud vision and both companies share the same view on this opportunity.
SuccessFactors has over 3,500 customers coming from 168 countries. It has a 77 percent year-over-year revenue growth recorded for this year’s third quarter. And as for the first nine months of the year, it has a 59 percent year-over year revenue growth according to SAP.
In a post from Analyst Paul Hamerman from Forrester, he noted that SAP’s acquisition of SuccessFactors will help the former in gaining a competitive advantage for human resources applications. He added that this also reaffirms SAP’s commitment of using the key business model of software-as-a-service.
Another analyst from Forrester, China Martens expressed that she expects an interesting incorporation of SuccessFactors with SAP’s existing HCM.
