Monday, January 29, 2007

Oracle to Acquire SAP?

Yes, you read that correctly. Rumors have come out that Oracle might make a takeover bid for SAP. They appeared in an AFX News story out of the UK. In the part of the world where I live (a snowball’s throw from Fargo) if I heard someone suggest this kind of craziness I’d conclude that the cold has affected their thinking (wind chill is -20° as I type this, actual temperature will be that low by the weekend).

As one analyst puts it, those repeating such rumors are “seemingly oblivious of the anti-trust hell that would break loose in Justice Department and European Union circles before the ink was dry on the tender documents.” Seriously, we had trials and anti-trust hearings over the PeopleSoft deal. Is there any chance the regulatory authorities are going to be ok with one company owning 100 percent of the enterprise software market? No.

Secondly, any offer for SAP would likely be too low to have any chance at being accepted. The current rumor is that Oracle is considering a possible bid of $49.78 per share, just a 6% premium to where the stock as been recently trading. That kind of offer sounds more like meaningless chest pounding than a real takeover attempt. Then again, would it be shocking to see Larry and company make a low ball offer like that just to make the point that he can? It would be a statement of the strength of Oracle while suggesting SAP is in significant trouble (hardly the case). Even the rumor helps Oracle in that regard, which makes one wonder where it originated.

A more likely target for Oracle in the near term is Business Objects. That deal makes sense for a number of reasons and a flurry of M&A activity in the business intelligence space seems imminent. But come on, Oracle acquiring SAP? That’s crazy. That would be like Exxon acquiring Mobile, or AT&T acquiring Bell South. Wait a minute…

1 comment:

  1. What about Oracle acquiring Ariba or Bottomline Technologies to get a foothold into sourcing, spend management and pricurement market? I am surprised Oracle has not made a move yet.

    edocs they acquired through Siebel has a weak proposition.

    OB10 is too small to be considered, but will grow fast with the right finance and marketing behind them

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