Week 3 Article - SAP's Business Intelligence Leap To expand...

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SAP's Business Intelligence Leap To expand in one of business software's hottest sectors, the German giant detours from its organic growth plan and agrees to buy Business Objects for $6.8 billion by Aaron Ricadela In the rapidly consolidating business software market, SAP ( SAP ) has taken a conservative tack, preferring to rely on growth through sales of its own meticulously engineered products. But on Oct. 7, Chief Executive Henning Kagermann ditched his playbook, announcing a $6.8 billion deal to acquire Business Objects that could signal the German software giant's willingness to buy its way into new areas of the corporate software market. The deal would vault SAP, the world's third-largest software maker, squarely into one of the software industry's hottest sectors. Business Objects ( BOBJ ) competes in the fast-growing market for software that helps companies plan budgets, close their books, and divine their most profitable customers. Together with an aggressive push by SAP into selling software aimed at small and midsize companies, adding business intelligence to its portfolio could help SAP win new customers at a time when sales growth has slowed for its traditional manufacturing and supply-chain management software. "This is a space where we decided that, with acquisitions, we'll be more successful," Kagermann told reporters and analysts in a hastily arranged conference call from Germany on Oct. 7. "It accelerates significantly our growth potential." The boards of Walldorf (Germany)-based SAP and Paris-based Business Objects approved the proposed deal after negotiations that ended on the night of Oct. 7 in Germany. SAP will offer €42, or $59.37, in cash per share of Business Objects, an 18% premium over the $50.27 closing price of the shares on Oct. 5, the last day of trading before the acquisition was announced. The
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Week 3 Article - SAP's Business Intelligence Leap To expand...

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