Could HP swoop in to buy Sybase over SAP?

Could HP swoop in to buy Sybase over SAP?

Summary: SAP paid a big premium for Sybase and there may be a good reason for that hefty price tag: Hewlett-Packard could also bid for the database and mobility software company.

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SAP paid a big premium for Sybase and there may be a good reason for that hefty price tag: Hewlett-Packard could also bid for the database and mobility software company.

One of the dangling questions about the SAP's Sybase purchase revolves around why the enterprise application giant paid so much. At a price of $65 a share, SAP paid a 56 percent premium to Sybase's closing price of $41.57 on May 11.

Cowen & Co. analyst Peter Goldmacher makes a compelling case that HP could make an offer for Sybase. In fact, Goldmacher argues that HP may have no choice.

Related: SAP's Sybase acquisition: Handicapping the big questions

SAP's acquisition of Sybase was positioned as a way to become a leading player in mobile enterprise applications. Although most of Sybase's business revolves around relational databases, CEO John Chen has remade the company as a leading mobile enterprise company.

Now here's where things get interesting. Goldmacher connects a few dots. First, HP bought Palm as a way to get a mobile OS and ultimately offer it as part of the overall business IT stack of stuff. Goldmacher's bottom line:

We believe that Hewlett Packard could emerge as a buyer for Sybase. Sybase's core offerings revolve around data, analytics and mobile, three critical holes in HP's current software strategy. HP has $12.4B (incl Palm) in cash on the balance sheet and the deal is $0.03 accretive to earnings at a 10% premium to SAP's purchase price of $65. If HP doesn't buy Sybase, it loses its last chance to be a relevant standalone competitor in data management and risks falling further behind enterprise data management titans Oracle and IBM.

The case is compelling for sure. Oracle ditched HP as a partner when it bought Sun. HP responded with a big Microsoft partnership that Goldmacher argues "still doesn't make HP an enterprise data player."

If HP owned Sybase, it would have a standalone database and be able to compete with Oracle's Exadata machines. On the software side of the house, Sybase would bring its IQ Analytics application and give HP a more credible business intelligence offering. Goldmacher thinks that HP's Neoview is sucking wind. Buying Sybase would be cheaper for HP than acquiring Teradata, a leading data warehouse and business intelligence player.

In other words, the argument for HP and Sybase is almost flipped compared to the SAP case. SAP talked mobility and the database business is something that will ride along as a separate entity. For HP, Sybase's database business would be more critical.

Goldmacher gets at a key point. HP's portfolio is dominated by hardware. HP Software is sizeable in its own right, but it doesn't have nearly the software weapons that IBM and Oracle have.

Now there's also a HP-Sybase mobility case too. Goldmacher notes:

We love the Palm acquisition because it enables HP to create a mobile platform that is not just Windows on yet another form factor. The ability to leverage the Sybase Unwired Platform on its own hardware and OS as well as any and all third party platforms immediately makes HP a massive competitor in the mobile space. We believe that having an open hardware and software solution will catalyze the arrival of broad-based enterprise mobile apps by offering customers an enterprise class, platform agnostic, standards-based solution.

Is HP the only other potential bidder here? Maybe not. Oppenheimer analyst Shaul Eyal said there could be a bidding war for Sybase and perhaps even Oracle steps in. SAP may still win the Sybase deal on strategic fit, but closing the acquisition may not be the lock it seems.

With HP and maybe even Oracle potentially waiting in the wings we now know why SAP didn't scrimp on the premium.

More news and analysis on the deal:

Topics: Hewlett-Packard, Data Centers, Data Management, Enterprise Software, SAP, Software

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11 comments
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  • RE: Could HP swoop in to buy Sybase over SAP?

    HP won't grab Sybase. It has close relationships with Oracle to protect. Microsoft will grab Sybase because of the aging SQL Server codebase and the lack of reliable always available database application services for Microsoft's mobile clients: Think: Blackberry outages.
    rboblee@...
    • <a href="http://www.tran33m.com/vb/f82.html">iphone</a>

      @rboblee@... HP just waits until SAP buys Sybase then they buy SAP... stranger things have happened...
      frank dib
      • <a href="http://www.tran33m.com/vb/f81.html">blackberry</a>

        @frank dib As rboblee mentioned, HP has many customers running Oracle on their hardware. HP would not want to alienate Oracle or customers.
        frank dib
  • WHY.. FOR THE LOVE OF EVERYTHING DB... WHY! Bad idea!

    Do not buy sybase! Let them die! Worst DB ever invented. Just put it out of its misery! DIE SYBASE!

    Can you tell i dont like sybase?
    Been_Done_Before
  • zdnet is the worst place to spam.. no one will click on your links...

    give it up!
    Been_Done_Before
  • RE: Could HP swoop in to buy Sybase over SAP?

    what if Oracle buys Motorola now?
    Nagesh Tummala
  • HP and Sybase?

    Do you really think Sybase will compete with Exadata? There are already other VLDB products on HP hardware such as XtremeData DBx.

    As rboblee mentioned, HP has many customers running Oracle on their hardware. HP would not want to alienate Oracle or customers.

    Where would such an acquisition fit with Neoview?

    Note to Sybase: Think carefully before you get acquired by HP.
    pwatson
  • Sybase has a lot to offer!

    The Sybase database as we knew it in the 90's has been significantly reworked and is now a database of choice in government and large institutions around the world.

    However the real secret is the other database - Sybase SQL Anywhere - originally developed at Watcom. This is at the heart of the mobile offerings and is one of the most advanced databases in the world. It has been reported to be the fastest relational database in the world for small and medium servers under $6500. SQL Anywhere could challenge Oracle and Microsoft for performance and cost to own and operate.

    Financially Sybase has been hitting on all cylinders for years now - as its stock performance can attest.
    gabarber@...
  • RE: Could HP swoop in to buy Sybase over SAP?

    HP just waits until SAP buys Sybase then they buy SAP... stranger things have happened...
    phswartz
  • RE: Could HP swoop in to buy Sybase over SAP?

    Well I think that irrespective of the actual stock price, Teradata gets cheaper on 1st October 2010 as that is the 3 year anniversary of their tax-exempt spin off from Mr Hurd's former company - NCR
    rickety_z
  • RE: Could HP swoop in to buy Sybase over SAP?

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