SAP announced yesterday that it will acquire venerable database company Sybase to bolster its mobile development practice. The deal is valued at approximately US$5.8 billion in cash.
Sybase’s board of directors unanimously approved the transaction, which is a 44% premium over its three-month average stock price of about $36 per share. The transaction will close in the third quarter. The agreement was signed by SAP’s American subsidiary and underwritten by Barclays Capital and Deutsche Bank.
Sybase will operate as a standalone unit of SAP called “Sybase, an SAP Company.” Its management team will be kept in place, and SAP intends to appoint Sybase’s CEO John Chen to its board.
Datamonitor analyst Warren Wilson said in a statement, “The acquisition may also signal a shift in SAP’s long-standing strategy of growth through internal development rather than acquisition—a wise shift, in our view, given the rapid pace of IT innovation overall and the market’s positive response to arch-rival Oracle’s acquisition-based strategy.”
The acquisition also broadens Sybase’s capacity to develop new solutions for analytics. It will gain access to SAP’s in-memory database technology, significantly increasing the performance of its analytics and complex event processing software, as well as enabling it to build those capabilities into its transactional products, Wilson stated.
“The move also furthers SAP’s strategy of supporting customers’ heterogeneous IT environments, because Sybase’s anytime/anywhere/any application approach has resulted in a platform that is versatile enough to connect and mobilize a wide variety of applications and data, both SAP and non-SAP,” said Wilson.
Sybase, founded in 1984 as Systemware, began as a database software maker competing with firms like IBM, Informix and Oracle. The company’s main product, called SQL Server, was originally offered for Unix.
Sybase worked with Microsoft to port SQL Server to OS/2 and Windows NT. Both companies marketed and expanded the Windows version; Microsoft SQL Server grew into a dominant player in the database industry, while Sybase SQL Server fell behind.
The companies have since taken their database product lines in different directions; Sybase now calls its database Adaptive Server Enterprise.
Since the late 1990s, Sybase has reinvented itself as a provider of tools for building applications and delivering data to mobile devices.
In 2006, Sybase acquired Mobile 365, a mobile messaging company that handles over 1.5 billion messages per day, ranging from alerts and promotions to transactions, according to Datamonitor. Mobile 365 has relationships with more than 850 mobile providers covering more than 4 million subscribers.
In buying Sybase, SAP has substantially strengthened its hand in mobile applications, Wilson said. Sybase’s platform provides versatile deployment options for mobile applications across BlackBerry, iPhone and Windows Mobile devices.
The combination of SAP and Sybase is a “transformative event” for the software industry, “revolutionizing” how transactional and analytic applications are built, Sybase’s Chen said in a statement. Allowing customers to run their business from many devices will drive enterprise productivity, he added.