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SAP fluffs up cloud biz with $3.4bn buy

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SAP is shoring up cloud computing capabilities with the acquisition of SuccessFactors, a human resources software firm, for $3.4bn cash.

SAP is paying a hefty premium for SuccessFactors - some 52 per cent above the closing price on Friday, December 2 (the day before the acquisition was announced) and some 10 times revenues. But it has been slow to get its own software fully cloud-enabled (see our story about the long gestation to get SAP on to the cloud) and SuccessFactors is undeniably a substantial cloud player.

Based in California, SuccessFactors is perhaps the second-biggest pure play apps-in-the-cloud firm, behind only Salesforce.com. The company has 3,500 customers and 15 million users in 168 countries. Clients include Comcast and Siemens.

SuccessFactors is to be integrated into the SAP Business ByDesign portfolio and will help SAP better compete with arch-enemy Oracle in the race to the cloud. In October 2011, Oracle announced the $1.5bn acquisition of RightNow Technologies, a cloud provider of tech support and salesforce automation tools.

Lars Dalgaard, founder and CEO of SuccessFactors, will lead the cloud business of SAP in addition to his responsibility as CEO of SuccessFactors, which will remain a standalone unit.

Dalgaard said: “This is a revolutionary combination of proven capabilities that will allow SuccessFactors to accelerate our roadmap by 10 years, and bring the world’s leading application knowledge and intellectual property to our customers through the cloud, and the largest applications customer base instantly."

The transaction is expected to close in the first quarter of 2012. ®

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