1072RA SAP Adds Ariba to Its Cloud-driven Master Architecture
Authors: Bruce Guptill, Bill McNee
Less than a week after laying out and demonstrating commitment to its comprehensive, Cloud-centric business and technology strategy at its Sapphire user event, SAP AG announced that it has agreed to buy collaborative commerce platform provider Ariba Inc. for $4.3 billion – about $45 per share of Ariba’s outstanding stock.
According to the company, Ariba's global trading platform connects and automates more than $319 billion in commercial transactions between some 730,000 companies. Ariba reported $444 million revenue for fiscal 2011, a 39 percent increase over fiscal 2010. Estimates from leading Wall Street analysts such as Jason Maynard of Wells Fargo Securities pegged fiscal 2012 and 2013 revenues at $532 million and $608 million respectively, prior to the announcement. This implies that SAP is paying approximately 8x estimated forward fiscal 2012 revenue for Ariba. In comparison, SAP paid approximately 7.5x estimated forward fiscal 2012 revenue for SuccessFactors.
SAP has stated that Ariba's board of directors has unanimously approved the acquisition, which SAP will fund using a combination of cash on hand and a 2.4 billion-euro/ $3.06 billion commercial term loan program.