Enterprise software giant SAP America Inc. has entered into an agreement to acquire Ariba, a cloud-based business commerce network, for $45.00 per share, representing an enterprise value of approximately $4.3 billion. The acquisition will combine Ariba’s buyer-seller collaboration network with SAP’s broad customer base and deep business process expertise with the goal of creating new models for business-to-business collaboration in the cloud.
The Ariba board of directors has unanimously approved the transaction. The transaction is expected to close in the third quarter of calendar year 2012, subject to Ariba stockholder approval, clearances by relevant regulatory authorities and other customary closing conditions.
SAP’s entry into the inter-enterprise business network space will expand its growth opportunities and accelerate its momentum in the cloud. At its recent SAPPHIRE user conference, SAP announced the roadmap for its cloud applications business (Software-as-a-Service), focusing on managing customers, suppliers, employees and financials, in addition to its cloud suite offerings SAP Business ByDesign and SAP Business One. The acquisition will also boost SAP’s cloud applications portfolio with the addition of Ariba’s cloud-based procurement solutions.
Headquartered in Sunnyvale, Calif., Ariba has approximately 2,600 employees. Ariba’s web-based trading community helps companies discover, connect and collaborate with a global network of partners – all in a cloud-based environment. With $444 million in total revenue, Ariba experienced 38.5 percent annual growth in 2011. Its business network recorded 62 percent organic growth in the same period.
Industry experts estimate the cloud-based enterprise network and procurement segment at a current size of $5 billion in revenue. The Ariba network, for instance, connects and automates more than $319 billion in commerce transactions, collaborations, and intelligence among more than 730,000 companies. SAP’s global customer base of more than 190,000 companies includes some of the largest buyers and sellers in the world, offering great potential to increase the number of participants, as well as the volume and types of transactions conducted through this network. SAP claims that 63% of the world’s transaction revenue touches an SAP system.
Upon completion of the transaction, it is planned to consolidate all cloud-related supplier assets of SAP under Ariba. The existing management team will continue to lead Ariba, which will operate as an independent business under the name “Ariba, an SAP company.” The SAP Executive Board intends to nominate Ariba CEO Bob Calderoni to the SAP Global Managing Board after closing of the transaction and subject to the approval of the SAP Supervisory Board.