SAP makes $4.3 billion cloud computing bet with Ariba purchase

SAP has acquired cloud commerce vendor Ariba in a bid to broaden its cloud platform with business-to-business commerce transactions. The deal was valued ath $4.3 billion (2.72 billion).

Ariba's cloud platform targets B2B commerce transactions and according to a statement release by SAP is a natural fit for the company's "broad customer base and deep business process expertise."

Following completion of the deal, Ariba will in a stroke boost SAP's presence in cloud software. Last year, the company also acquired human resource cloud player SuccessFactors. SAP will consolidate all cloud-related supplier assets of SAP 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." Its chief executive Bob Calderoni, will be nominated to SAP's global managing board.

Ariba's business is centred on procurement, spend management, and supplier discovery. It partners with most of the major ERP suppliers, including SAP, as well as Oracle, Salesforce and IBM.

Ariba, based in Sunnyvale, California, has 2,600 employees, $444 million in revenue, and saw a 38.5 percent growth in revenue in 2011. Its business network recorded 62 percent organic growth in the same period.

"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 deal has been unanimously approved by Ariba's board and is expected to close in the third quarter of this year, subject to stockholder and regulatory approvals. The per share purchase price represents a 20 per cent premium over the May 21 closing price and a 19 per cent premium over the one month volume weighted average price per share.