German software giant SAP just acquired Concur Technologies, a travel and expense software provider, at a deal worth roughly $US8.3 billion. SAP agreed to pay $US129 per share, a 20% premium over Wednesday’s closing price.
Concur’s software helps the enterprise simplify its travel expense management. It has over 23,000 clients and 25 million active users across 150 countries, and is generally considered one of the largest companies in a sector called travel and expense (T&E) management software. In 2013, Concur had $US545.8 million in sales for a net loss of $US24.3 million.
“The combination of Concur and SAP will bring together the leading cloud-based Travel and Expense platform with the market-leading enterprise application software company, and we expect this union to drive significant value for our customers,” Concur CEO and Chairman Steve Singh wrote on the company blog.
Following today’s deal, SAP said it will have more than 50 million users in the cloud, which is more than any other enterprise cloud company. By measure of revenue, it will become the second-largest cloud company, it said.
Concur shares went up nearly 20% after hours, trading at $US128.90 per share. SAP shares went up by $US0.83, or just a little over 1%.
Here’s the full press release:
WALLDORF, Germany and BELLEVUE, Washington — SAP SE (NYSE: SAP) and Concur Technologies, Inc. (NSDQ: CNQR) today announced that SAP’s subsidiary, SAP America, Inc., has entered into an agreement to acquire Concur. With more than 23,000 customers, 4,200 employees and 25 million active users in over 150 countries, Concur is the leader in the multi-billion market for travel and expense (T&E) management software. With Concur, SAP’s business network — the world’s largest — will transact more than US$600 billion annually, deliver frictionless commerce across more than 25 different industries and address annual corporate travel spend of US$1.2 trillion worldwide.
The Concur board of directors has unanimously approved the transaction, which is expected to close in the fourth quarter 2014 or the first quarter 2015, subject to Concur stockholder approval, clearances by the relevant regulatory authorities and other customary closing conditions. The per-share purchase price of US$129 represents a 20% premium over the September 17 closing price, a 21% premium over the one month volume weighted average price per share and an enterprise value of approximately US$8.3 billion. The transaction will be funded from a credit facility agreement of up to €7 billion to cover the purchase price, target debt refinancing and acquisition-related costs. The company has undergone an external credit rating process with two agencies. The results of this process will be published shortly.
“The acquisition of Concur is consistent with our relentless focus on the business network,” said Bill McDermott, CEO of SAP. “We are making a bold move to innovate the future of business within and between companies. 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. With the SAP HANA platform, the possibilities to innovate new business models around Concur and the network are limitless.”
“Concur shares SAP’s vision to help our customers ‘Run simple’,” added McDermott. “Concur cloud solutions are network-based and enable context-aware applications for travellers to use on any mobile device. With Concur, people are given the professional courtesy and ultimate flexibility to make the choices that are right for them. No longer does cost control for companies have to come at the expense of people.”
“We have always been focused on making solutions for real customer problems, and with SAP we have a great opportunity to advance that mission,” said Steve Singh, CEO of Concur. “We are constantly seeking innovative ways to deliver the best customer experience and we’re excited about leveraging SAP technology, including HANA as we scale globally.”
Scaling the Business Network
- Concur will expand SAP’s business network to reach into the US$1.2 trillion corporate travel spectrum.
- Concur has developed an open platform to connect the corporate travel ecosystem, such as airlines, hotels and car rental companies in new and innovative ways.
- With the addition of the corporate travel ecosystem to the Ariba and Fieldglass networks, SAP’s business network will have an opportunity to power transactions that drive more than US$10 trillion of global spend annually.
- With SAP HANA®, Concur anticipates real-time network collaboration that will reshape the travel value chain, create new business models and eliminate needless complexity confronting millions of business travellers worldwide.
- SAP applications touch two-thirds of global commerce; combined with the power of SAP HANA, SAP is uniquely positioned to make the “real-time networked economy” a reality.
Achieving Significant Business Synergies
- Together the two companies will have more than 50 million users in the cloud — more than any enterprise cloud company — and will be the second largest cloud company by measure of revenue.
- Concur has a revenue run rate of more than US$700 million. With its global reach in every country around the world, SAP will provide a global platform to scale.
- The majority of SAP customers do not run Concur, presenting a clear opportunity to scale as part of the SAP franchise.
- Only 30% of Concur customers currently run SAP, presenting a dynamic opportunity to introduce SAP innovations to the Concur install base.
- With one of the richest T&E datasets in the industry and the potential of the SAP HANA platform, Concur will deliver unique insight and analytics to business expense wherever it occurs.
- With the dominance of the mobile device in travel and entertainment, Concur will collaborate with SAP’s innovation leadership to build network-based, context-aware mobile applications.
- SAP will migrate all its corporate travel and expense management to Concur’s integrated solutions.
Investing for Business Growth