Enterprise software giant SAP plans to acquire software firm Business Objects in a $6.7 billion deal, (4.8 billion), a move that vaults SAP ahead of the pack in the growing business intelligence space.
It also will help the German software firm leverage Business Objects' investments in providing its product lines as a service.
Henning Kagermann, CEO of SAP AG, said the combination of SAP's offerings with BI's would benefit customers, partners, employees and shareholders. The merger, he continued, will ramp up the solutions designed to strengthen decision processes, increase customer value and create sustainable competitive advantage through real-time, multi-dimensional business intelligence.
The deal is yet another signal of how hot the market for business intelligence software has become for major enterprise customers.
Speculation about who would win the derby to acquire Business Objects has been flying for months after a recent flurry of BI acquisitions this year. In March, SAP's archrival Oracle bought BI powerhouse Hyperion for $3.3 billion. At the time, the deal was seen as giving Oracle a big opportunity to steal SAP customers away with BI products that compete with Business Objects and Cognos.
Business Objects responded a month later with its own acquisition of enterprise performance management (EPM) software maker Cartesis S.A. for $300 million in cash.
In addition, Business Objects also got a leg up in the software-as-a-service sector a year ago with its purchase of Nsite software.
By contrast, SAP, considered the world's largest enterprise software provider with more than 41,200 customers across 120 countries, had chosen the organic route to BI growth -- until the Business Objects deal.
But analysts such as Ovum Research's David Bradshaw and Helena Schwenk said that SAP had no choice but to respond to Oracle's purchase of Business Objects' competitor Hyperion, which specializes in adding financial and performance-management tools to SAP systems.
"Another factor is the business growth that SAP can get from the combination," the analysts said in a research note. "Large suppliers are attracting an ever-larger share of customer spend, as customers try to reduce the number of suppliers to bring some order to their IT buying. In some accounts, the purchase might turn SAP from being an 'also ran' into a strategic supplier."