SAP to buy cloud-software firm for $3.5 billion

Germany's SAP says it will shell out $3.5 billion to acquire SuccessFactors, a maker of cloud-based software for human-resources management.

Germany's SAP said today that it will shell out $3.5 billion to acquire SuccessFactors, a maker of cloud-based software for human-resources management.

As reported in The New York Times, the all-cash transaction offers SuccessFactors shareholders a 52 percent premium above Friday's closing stock price and reflects the fact that many companies are switching to cloud-based software. The leap to the cloud lets companies avoid the up-front and maintenance fees associated with the traditional approach of hosting software on site.

"The premium is significant and it shows that SAP was struggling in its cloud strategy, especially in talent management," Forrester analyst Paul Hamerman told the Times' DealBook blog. "The cloud has been a small part of SAP's revenue stream, about 2 percent; the deal adds to the revenue base and shows SAP's strong commitment to the software-as-a-service business model."

In its press release today, SAP said: "The cloud is a core of SAP's future growth, and the combination of SuccessFactors' leadership team and technology with SAP will create a cloud powerhouse."

The deal is expected to close early next year.

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