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SAP to buy software maker Ariba for $45 per share
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Logo of German company SAP is pictured at the CeBit computer fair in Hanover, March, 6, 2012. The biggest fair of its kind will run to March 10, 2012.
Credit: Reuters/Fabian Bimmer
By Jim Finkle and Sayantani Ghosh
Tue May 22, 2012 5:29pm EDT
(Reuters) - Europe's top software company, SAP AG said it would buy U.S. software maker Ariba Inc for $45 a share, turning up the heat on SAP's U.S. rival Oracle in the Internet-based software market.
The deal puts Ariba's enterprise value at about $4.3 billion. Enterprise value is market capitalization plus debt and other considerations.
The acquisition of Sunnyvale, California-based Ariba will be the latest in a string of acquisitions by German technology company SAP to help its fuel revenue growth.
Ariba shares were about up about 19.2 percent to $44.88 on Nasdaq on Tuesday. Ariba shares had been halted prior to the announcement of the deal.
SAP said the transaction would be funded from its free cash and a 2.4 billion euro ($3.06 billion) term loan facility.
It said it expected the deal, already approved by Ariba's board, to close in the third quarter of this year and that the purchase price is equivalent to a 20 percent premium over Ariba's closing price on Monday.
Cross Research analyst Richard Williams said SAP was underpaying for Ariba.
"We think a counter bid is likely and have raised our target to $50 from $40," Williams said.
Evercore analyst Kirk Materne said SAP was paying full value for Ariba, but that the company is "obviously a fairly unique asset that would seem to be a good fit with SAP's revamped Cloud strategy."
SAP said it would consolidate its cloud-based supplier assets under Sunnyvale, California-based Ariba, which would continue to operate as an independent business.
(Reporting by Jim Finkle in Boston Sayantani Ghosh in Bangalore; additional reporting by Noel Randewich in San Francisco, Editing by Viraj Nair, Carol Bishopric and David Gregorio)
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