Sage, the UK's largest independent software vendor has become the subject of takeover speculation. Last week, rumors were swirling that Sage was being courted by Infosys. Earlier today, Yvette Essen in the Telegraph repeated the speculation, throwing the unlikely spectre of Oracle into the mix. Nick Clark at The Independent meanwhile threw Cap Gemini's name into the ring.
Earlier in the month, UBS issued a positive note on Sage having trawled through the Emdeon customer base:
It has surveyed customers of Sage’s Emdeon US medical software division and believes that concerns about falling demand from medical practices and possible glitches in the software are overdone. However, it said that it had uncovered evidence that the group, whose core business is accounting software for small firms, had made only mediocre efforts to market its medical software.
When Sage acquired Emdeon, I felt they'd paid a hefty premium and earlier in the year it became obvious this division really was not performing at all well. In July, Andy Corbin who ran the unit was fired and at the time I said:
It would now seem that Mr Corbin wasn’t up to snuff as far as Sage is concerned and has paid the price. It will be interesting to see what happens over the next few months.
Sage has been the subject of takeover rumors in the past with Microsoft said to be the front runner. On this occasion, the contenders are an odd bunch. I can't see Oracle going near this one because there's no technology fit. This doesn't sound like the kind of thing that Infosys would do although stranger things have happened. That just leaves Cap Gemini. Given their recent partnering with Google, it could make sense for them to morph towards a full blown development outfit.
The last rumor is that Sage might be taken private. This only makes sense if Sage was seriously thinking about the saas space and had figured that it needed to shovel a lot of money into R&D. Historically, Sage has put minimal resources into research, concentrating instead on backfilling and maintaining its 50+ code bases.
Whether this is of wishful thinking in a stock market currently in the doldrums or whether it is real remains to be seen. Sage isn't acting like a company in acquisition talks. Only last week, Sage acquired European treasury management vendor XRT. My sources would not comment (naturally) but they also seemed surprised at such talk. In the meantime the company is working on new initiatives that will take it into the social media world. This will be its second attempt.