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SAP to Buy Business Objects

The companies will merge in a $6.8 billion cash deal.

The consolidation of the software sector continues.

German database firm


(SAP) - Get Report

said Sunday it has agreed to buy French business intelligence software maker

Business Objects


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for about $6.8 billion in cash.

Business Objects' board has approved the tender offer agreement and anticipates recommending the offer to its shareholders subject to fulfillment of certain regulatory requirements.

The deal is expected to add to SAP's earnings per share in 2009 and beyond, but SAP anticipates the transaction will hurt its 2008 EPS by "mid dsingle digits euro cents."

Business Objects is one of many software providers long thought to be attractive to larger software conglomerates aiming to fill out their product offerings. Reuters reported late last month that the company had begun pursuing a buyer and had hired Goldman Sachs to find an investor.

American Depositary Shares of Business Objects closed Friday at $50.27, signifying a market cap of about $4.8 billion.

The companies expect to close the deal within the first quarter of 2008.

Business Objects announced separately that it expects third-quarter results below Wall Street estimates, saying license revenue was below expectations.