SAP AG (NYSE: SAP) has entered into an agreement to acquire Ariba, Inc. (Nasdaq: ARBA), a cloud-based business commerce network, for $45.00 per share, representing an enterprise value of approximately $4.3 billion.
Headquartered in Sunnyvale, California, Ariba has approximately 2,600 employees. Ariba combines industry-leading technology with a web-based trading community to help companies discover, connect and collaborate with a global network of partners – all in a cloud-based environment. With $444 million in total revenue, Ariba experienced 38.5 percent annual growth in 2011. Its business network recorded 62 percent organic growth in the same period.
According to SAP, the acquisition will combine Ariba's successful buyer-seller collaboration network with SAP's broad customer base and deep business process expertise to create new models for business-to-business collaboration in the cloud. The acquisition establishes SAP as the leading business network, adding business-to-business collaboration to its existing solutions.
SAP's entry into the inter-enterprise business network space significantly expands its growth opportunities and accelerates its momentum in the cloud. Last week, SAP announced the roadmap for its cloud applications business (Software-as-a-Service), focusing on managing customers, suppliers, employees and financials, in addition to its cloud suite offerings, SAP Business ByDesign and SAP Business One.
The acquisition will also significantly boost SAP's cloud applications portfolio with the addition of Ariba's leading cloud-based procurement solutions.
"The cloud has profoundly changed the way people interact. The impact will be even greater as enterprises connect and collaborate in new ways with their global networks of customers and partners," said SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe. "Cloud-based collaboration is redefining business network innovation, and we are catching this wave in the early stage of its evolution. The addition of Ariba will create the business network of the future, deliver immediate value to our customers and provide another solid engine for driving SAP's growth in the cloud."
The combination of SAP's innovations and core applications with the Ariba cloud-based network is also expected to create new business value for customers. According to SAP and Ariba, together the companies can deliver a truly end-to-end solution that enables enterprises 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. Ariba's open network and SAP's integration expertise will facilitate participation and extend the benefits of business collaboration to all companies, on any system, from any provider.
Relationship and transaction information from commerce activity in the Ariba network together with SAP's leading analytics will provide real-time insights to enable trading partners to discover, connect and collaborate more effectively, and all SAP customers will be able to easily connect to the business network through pre-built integration points.
"In our personal lives, networks are playing an increasingly important role in how we connect, share and shop – bringing more insight and efficiency into everything we do," said Bob Calderoni, CEO, Ariba. "Businesses are looking for the same connectedness, insight and efficiencies in the processes and collaboration with customers, suppliers, and partners beyond the walls of their companies. By combining Ariba's open global trading network and SAP's solutions and analytics, we are ushering in a new era of business-to-business collaboration and driving new levels of productivity."
Upon completion of the transaction, SAP plans to consolidate all of the company's cloud-related supplier assets under Ariba. The existing management team will continue to lead Ariba, which will operate as an independent business under the name "Ariba, an SAP company."
The SAP Executive Board intends to nominate Ariba CEO Bob Calderoni to the SAP Global Managing Board after closing of the transaction and subject to the approval of the SAP Supervisory Board.