SAP Strikes Biggest Ever Deal With Concur Technologies Offer

BERLIN (The Deal) -- German business management software maker SAP (SAP)  on Thursday agreed to buy unprofitable expense-management software rival Concur Technologies (CNQR)  for $8.3 billion, the biggest-ever buy for a company used to writing checks in the billions.

SAP would pay $129 per Concur share, a 20% premium over the stock's Wednesday close, to expand its cloud-related business and get a piece of the market for business travel software. The equity value of the deal is $7.4 billion.

"Concur Technologies will move the company toward the 2 billion euros ($2.6 billion) mark for cloud revenue," wrote Kepler Chevreux analyst Laurent Daure in a note in anticipation of the agreement. He has a buy rating on SAP shares.

SAP has been splashing out in recent years to expand its business in the cloud, renting software and storage to customers rather than selling licenses outright. Analysts have criticized the company for lagging rivals in cloud offerings but CEO Bill McDermott has apparently been listening and has spent billions trying to catch up.

The company reportedly paid about $1 billion for Chicago workforce management specialist Fieldglass Inc. in May. In 2012, it spent $3.4 billion on human resource software company SuccessFactors Inc., with a focus on cloud services, and $4.3 billion for supply chain management company Ariba Inc.

Analysts were skeptical of Thursday's agreement because it won't contribute to earnings until 2016 and because of the price.

Investors agreed, pushing the shares down 2.7%, or 1.58 euros, to 58.31 euros in morning Frankfurt trading.

SAP said the deal has an enterprise value of $8.3 billion and will give it a company that automates the collection of travel expanses. Concur integrates services from popular travel companies to allow customers to book travel and automatically collect expense information while adhering to corporate travel policies.

In the quarter ended June 30, Concur, of Bellevue, Wash., had revenue of $178.4 million. It reported zero net income per share in the period after profit per share of $0.05 in the same period a year earlier.

SAP said it will finance the purchase with a 7 billion euro credit facility, which it will also use to pay off unspecified existing debt.

"With Ariba, Fieldglass and Concur, SAP is the undisputed business network company. We are redefining how businesses conduct commerce across goods and services, contingent workforces, travel and entertainment," CEO McDermott said in a statement.

Deutsche Bank AG's Jens Hardenkopf and Brian Truesdale acted as financial adviser to SAP. Counsel came from a Jones Day team of Daniel Mitz, Jonn Beeson and Steve Gillette as well as Toby Myerson and Steven Williams from Paul, Weiss, Rifkind, Wharton & Garrison LLP.

Qatalyst Partners' Frank Quattrone and George Boutros provided financial advice to Concur. Fenwick & West LLP's Douglas Cogen, Horace Nash, Kee Bong Kim, Linda Twomey, Thomas Kang, Philip Henry, Ashley Romero, Katherine Duncan, Shawn Lampron, Patrick Grilli, Stephen Gillespie, Claire O'Callaghan, Mark Ostrau and Will Skinner acted as legal advisers to the target.

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