SAP pays $3.4 billion for cloud vendor SuccessFactors

SAP America said Saturday that it is paying US$3.4 billion in cash to acquire SuccessFactors, a provider of cloud-based human capital management tools.

SAP executives said the move would greatly accelerate the company's push into the cloud application business. The deal, subject to regulatory approvals, is expected to close in the first quarter of 2012, and values SuccessFactors at $40 per share, a 52 percent premium over the company's December 2 closing share price.

Lars Dalgaard, founder and CEO of SuccessFactors, will join SAP to lead its cloud business, while continuing to head the San Mateo, California, company. SAP said that the firm, which has about 1,450 employees, would remain independent.

SAP "shares our cloud vision, and shares our vision for how big and disruptive this opportunity is," said Dalgaard on a conference call to discuss the deal. "We've had an incredible ride for the last ten years," he added, saying that nonetheless the cloud opportunity "is just beginning."

SAP said in a statement that the combination of the two companies "will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes." It called SuccessFactors' products "highly complementary" to SAP's HCM offerings as well as SAP Business ByDesign cloud suite and SAP's line of business cloud offerings.

"The cloud is a core of SAP's future growth, and the combination of SuccessFactors' leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally -- managing people and talent," said Bill McDermott, Co-CEO, SAP, in a statement.

According to SAP, SuccessFactors operates the largest scale of paying cloud users with 15 million subscription seats. It has more than 3,500 customers in 168 countries, and recorded 77 percent revenue growth year-over-year in the third quarter 2011 and 59 percent revenue growth year-over-year in the first nine months of 2011.

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