"Your network is the people who want to help you, and you want to help them, and that's really powerful."
-Reid Hoffman
September 18,2014
SAP to Acquire Concur Technologies for $8.3 Billion
martinwolf Transaction Analysis
Financial Information
- Enterprise Value: $8.3 Billion
- EV/LTM Revenue: 12.4x
Transaction Facts
- German enterprise software giant SAP (NYSE:SAP) announced that it was purchasing Concur Technologies (NSDQ:CNQR), a travel and expense management software company, for $129 per share.
- Concur, a leader in the travel and expense management software market, enjoys a B2B network with 23,000 customers, 4,200 employees and 25 million active users across 150 countries.
- With this acquisition, SAP’s business network (already the world’s largest) will now transact $600 billion annually across 25 different industries and tap into the $1.2 trillion annual corporate travel market.
A Necessary Play To Remain Competitive
- Building a Better Network: Key to SAP’s growth is its ability to strengthen its online business network – especially by growing into new industries and spaces. As such, SAP has paid similar premiums for companies with strong existing networks in the past such as with B2B marketplace Ariba for $4.3 billion and contract employee management software provider Fieldglass for $1.0 billion earlier this year.
- Networks in the News: This acquisition comes as Chinese B2B network Alibaba completes its own $21.8 billion IPO. While the space is hot, the two scenarios are not the same. Alibaba has an easier path to growth than SAP – anyone can quickly and easily sign up to sell products.
- Using Acquisitions to Build Capabilities: SAP faces increasing pressure from strong competitors such as Oracle (NYSE:ORCL), especially in the cloud and mobility space. This acquisition will help bolster SAP’s cloud presence – together the companies will have more than 50 million users in the cloud – but SAP lags behind competitors in regards to mobility.
- Turning to Inorganic Measures to Supplement Growth: SAP trades at 4.2x and has seen revenue growth rates of 2.2 percent and 3.6 percent for the last two years-despite multiple billion dollar acquisitions. It’s turning to Concur, with its growth rates of 31.8 percent and 24.1 percent in the same periods and 10.3x multiple, in another major acquisition aimed at jumpstarting its declining revenue growth trend.
For more information, view the press release by clicking here. martinwolf was not the advisor in this transaction.
