SAP to buy travel and expenses software maker Concur for $7.3 bn
19 Sep 2014
German business software maker SAP has agreed to buy US travel and expenses software maker Concur Technologies Inc for $7.3 billion in cash, strengthening its position in cloud computing.
The acquisition, which is being made through SAP's subsidiary, SAP America Inc, accelerates the company's growth in cloud computing while protecting its position in travel and expenses management.
With more than 23,000 customers, 4,200 employees and 25 million active users in over 150 countries, Concur is the leader in the multi-billion space for travel and expense (T&E) management software.
''With Concur, SAP's business network - the world's largest - will transact more than $600 billion annually, deliver frictionless commerce across more than 25 different industries and address annual corporate travel spend of $1.2 trillion worldwide,'' SAP stated in a release.
The Concur board of directors has unanimously approved the transaction, which is expected to close in the fourth quarter of 2014, or the first quarter 2015, subject to Concur stockholder approval, clearances by the relevant regulatory authorities and other customary closing conditions.
With 57 million outstanding shares, the per-share purchase price of $129 represents a 20 per cent premium over the 17 September closing price and a 21 per cent premium over the one month volume weighted average price per share, valuing the deal at $7.3 billion.
Including debt, the offer represents an enterprise value of approximately $8.3 billion.
SAP proposed to finance the transaction through a credit facility agreement of up to €7 billion ($9 billion) to cover the purchase price, target debt refinancing and acquisition-related costs.
SAP, which competes in cloud computing with global rivals including Oracle, IBM and Salesforce, had seen the cloud phenomenon as threatening its core business model, but it began a series of acquisitions with the $3.4 billion purchase of SuccessFactors in 2011 after Oracle embarked on its own belated cloud-buying spree.
''We are making a bold move to innovate the future of business within and between companies. With Ariba, Fieldglass and Concur, SAP is the undisputed business network company,'' said Bill McDermott, CEO of SAP.
''We are redefining how businesses conduct commerce across goods and services, contingent workforces, travel and entertainment. With the SAP HANA platform, the possibilities to innovate new business models around Concur and the network are limitless,'' he added.
With Concur, SAP will expand its business network into the $1.2-trillion corporate travel segment. Concur has developed an open platform to connect the corporate travel sphere, including airlines, hotels and car rental companies, in new and innovative ways, bringing an opportunity to power transactions that drive more than $10 trillion of global spend annually.
SAP applications touch two-thirds of global commerce and with Concur, it will have more than 50 million users in the cloud - more than any enterprise cloud company - and will be the second-largest cloud company by measure of revenue.
Concur has a revenue run rate of more than $700 million. With its global reach in every country around the world, SAP will provide a global platform to scale.
The majority of SAP customers do not run Concur, presenting a clear opportunity to scale as part of the SAP franchise.
Only 30 per cent of Concur customers currently run SAP, presenting a dynamic opportunity to introduce SAP innovations to the Concur install base.
With the acquisition of Concur, SAP will increase its cloud users to 50 million from 38 million.
"We have something big here, guys," said McDermott on a conference call.
