SAP Sheds Frugal Ways

SAN FRANCISCO -- Taking a page from the Oracle(ORCL) playbook, SAP's(SAP) acquisition Monday of a business intelligence software vendor spells a more flexible attitude at the German software maker.

SAP announced its intent to buy Business Objects(BOBJ) for $6.8 billion. The deal is expected to close in the first quarter of 2008.

SAP Chief Financial Officer Werner Brandt said roughly half the acquisition price will be paid out of cash, with the remainder to be financed through borrowing that the company intends to repay by the end of 2009.

"It will have some impact on the share buyback for the next two years," Brandt said.

Until now, SAP's mantra has been "organic growth." Hot on the heels of its entry into the on-demand market with its subscription-based Business ByDesign enterprise software suite built in-house, SAP's acquisition of a business software leader acknowledges that the formerly staid company must also grow by acquisition.

Oracle, known as a business-software consolidator, has dramatically increased market share in the past three years by buying companies like PeopleSoft and Siebel and business intelligence vendor Hyperion.

This acquisition leaves Cognos(COGN) as a possible takeover candidate as the remaining public software supplier with big market share in business intelligence. IBM(IBM) and Hewlett-Packard(HPQ) are often mentioned as companies possibly looking to expand their software lines with a BI supplier.