SAP America is looking to develop "the business network of the future" with the acquisition of cloud-based business commerce network Ariba at the price of $45 per share. That rounds out to roughly approximately $4.3 billion.
Each party brings something significant to the table here. Ariba already has the buyer-seller collaboration network, which is intended to compliment SAP's existing customer base as well as its B2B and on-premise solutions. Thus, this really gives SAP a big push in the cloud space.
SAP will also be bringing its own resources to boost Ariba. For example, SAP is integrating flagship HANA in-memory platform to improve Ariba's network performance.
Based on the press release, the idea is really to build a comprehensive, one-stop business networking option that "enables companies to achieve a closed-loop from source-to-pay, regardless of whether they deploy in the cloud, on-premise or through a combination of both."
Like most other cloud platforms and products emerging right now, SAP is also touting increased visibility into business intelligence and data throughout an entire enterprise thanks to the integration of Ariba and SAP business network procurement solutions.
Expected to close by the end of the third quarter of 2012, the merger will consolidate all of SAP's cloud-related assets under the Ariba umbrella.
Ariba is actually going to retain some level of independence as the company will keep its leadership team, and it will operate under the name "Ariba, an SAP company." Furthermore, current Ariba CEO Bob Calderoni will be nominated to the SAP Global Managing Board once the deal is done.
A conference call will follow at 4PM ET/1PM PT today.
UPDATE: During the conference call with analysts and investors on Tuesday afternoon, SAP co-CEO Bill McDermott assured that this merger would "maintain the openness of the business network" while also offering business customers the option to connect to other companies on any other source system provided by competitors such as Microsoft, NetSuite and Oracle.
Calderoni concurred, emphasizing that the combination of SAP and Ariba "comes at time when a revolution is occurring in business" as enterprises are more dependent on working with external partners.
SAP co-CEO Jim Hagemann Snabe referred to the merger with Ariba as a ""game-changing opportunity" because a fully-networked business environment that could be provided by these two players could eliminate guesswork, allowing customers to optimize the delivery of products and services to the right customers at the right time at the right price.
As SAP pushes its way further into the global cloud space, it's also expecting some big rewards. SAP executives predicted that the merger will produce approximately €2 billion ($2.6 billion at current exchange rates) in cloud revenue alone by 2015.