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Avi Rosenthal

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Acquisition is not simple

SAP -Sybase acquisition agreement

On May 14th SAP AG signed a definitive agreement to acquire Sybase Inc. for approximately $5,800 million. The offer price represents a premium of 44% over the three-month average stock price of Sybase and a premium of approximately 56.36% over the closing price of Sybase' common stock of $41.57 on May 11, According to the announcements by the two companies the deal, which follows a partnership for a significant time, is beneficial for both companies. I partially agree: It is very good for Sybase. However, I think that acquiring Sybase looks like a SAP's mistake.


What motivated SAP to acquire Sybase?
Previous SAP's CEO LEO Apotheker was replaced by Bill McDermott and Jim Hagemann Snabe due to conservative business approach. One of the significant results of this approach is few acquisitions. SAP's main competitor Oracle, is acquiring many companies in a relatively short time. So far SAP's significant acquisition was Business Objects a Business Intelligence infrastructure software provider, while oracle acquired ERP and CRM companies like PeopleSoft and Seibel, Infrastructure software leader BEA (Oracle's BEA Acquisition SOA perspective Revisited again), Infrastructure Hardware and Software vendor Sun (Vendors Survival: The Sun is red - Oracle to buy Sun First Take) and other applications and infrastructure vendor such as Hyperion and Golden Gate (The Golden Gate).

The new co-CEOs have to adopt a dynamic acquisition based policy. An acquisition of a large vendor like Sybase is a clear manifestation of a new policy.

Another major reason for Sybase's acquisition is Sybase's leading Mobile products.
Mobile infrastructure and applications as a significant part of Enterprise Architecture is a major IT trend. In order to compete in that segment SAP needs to integrate Mobile solutions to its Applications and Infrastructure. The partnership with Sybase marks it as a good candidate with leading Mobile products.

The third reason is Sybase's presence in the Financial vertical as an Infrastructure and Analytic solutions provider.

Read More at http://avirosenthal.blogspot.com/2010/05/acquisition-is-not-simple-sap-sybase.html

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Ari has over 30 years of experience in IT across a wide variety of technology platforms, including application development, technology selection, application and infrastructure strategies, system design, middleware and transaction management technologies and security.

Positions held include CTO for one of the largest software houses in Israel as well as the CTO position for one of the largest ministries of the Israeli government.