UPDATE 3-SAP to buy rival Sybase for $5.8 billion

* SAP to pay $65 cash/share; 56 pct premium to Tues close

* Sybase is No. 4 maker of database software

* Sybase shares rise to $64.50 in after-hours trade.
(Adds comments from analysts)

By Jim Finkle

BOSTON, May 12 (BestGrowthStock) – Germany’s SAP AG (SAPG.DE: ) said
it plans to buy smaller business software maker Sybase Inc
(SY.N: ) for $5.8 billion, gaining technology that allows it to
deliver accounting software and other programs to smartphones.

The acquisition would be the second largest in SAP’s nearly
40-year history, and comes after the departure in February of
Chief Executive Leo Apotheker, who was replaced by co-CEOs Bill
McDermott and Jim Hagemann Snabe.

SAP’s main rival, Oracle Corp (ORCL.O: ), was the first major
software maker to aggressively pursue acquisitions and has
spent more than $42 billion to buy about 60 companies.

“SAP finally learned that they should take some clues from
Oracle’s playbook. They finally woke up,” said Trip Chowdhry,
an analyst with Global Equities Research. “They are late, but
late is better than never.”

California-based Sybase sells programs that make it easy
for workers to access business software via smartphones and
other mobile devices. SAP already uses the technology to let
customers access its applications when they are on the road.

“We want to make sure SAP solutions can be accessed from
all leading mobile devices. The acquisition of Sybase will
allow us and our partners to do just that,” SAP’s Snabe said on
a conference call.

SAP has agreed to pay $65 per share in cash for Sybase,
which is the world’s No. 4 provider of database software, the
companies said. That represents a 56 percent premium to
Sybase’s Tuesday closing price on the New York Stock Exchange.

Sybase shares rose to $64.50 in extended trade, after
having climbed 35 percent to $56.14 on the NYSE after
Bloomberg’s report that SAP was planning to buy Sybase.

Sybase also sells a powerful database that large companies,
such as banks, use to store sensitive information. It is the
fourth-largest maker of database software after Oracle, IBM
(IBM.N: ) and Microsoft Corp (MSFT.O: ).

Oracle declined comment, while Microsoft and IBM could not
immediately be reached.

MOBILE SOFTWARE

Jefferies & Co analyst Ross MacMillan said Sybase’s most
valuable asset is its mobile software because it will give SAP
an edge over Oracle when it comes to allowing customers to use
business management programs on the go.

Those products only accounted for about 27 percent of
Sybase’s $403 million in software sales last year. The bulk of
revenue came from Sybase’s database, which is rarely used in
conjunction with SAP’s software products.

MacMillan said it was not clear how the Sybase database
would fit into the rest of SAP’s business of selling software
for managing business tasks, such as accounting, human
resources and manufacturing.

“The question I have is: what’s the plan with the database
business? Reading between the lines, it’s not really growing,
but it’s highly profitable,” MacMillan said.

SAP said that it would fund the deal with cash on hand and
a 2.75 billion euro loan facility.

The companies said they expect the transaction to close
during the third quarter, immediately adding to SAP’s
earnings.

SAP’s U.S. shares edged lower in extended trade to $44.50
from their close of $44.90.

Deutsche Bank and Barclays advised SAP, while Bank of
America Merrill Lynch advised Sybase.

SAP’s biggest acquisition to date is its $6.8 billion
purchase of Business Objects in 2008.

Stock Market

(Reporting by Jim Finkle. Editing by Robert MacMillan, Leslie
Gevirtz and Carol Bishopric)

UPDATE 3-SAP to buy rival Sybase for $5.8 billion