SAP to acquire Nasdaq-listed Callidus for $2.4bn

January 30, 2018

SAP, Europe's largest software company, announced a $2.4bn acquisition on Tuesday as it released fourth-quarter earnings.

SAP said it will acquire Callidus Software, a Nasdaq-listed company focused on cloud-based sales solutions, as it attempts to "reinvent the front office" and offer cloud solutions for businesses across the spectrum.

Callidus offers "Lead to Money" solutions involving real-time sales performance management for sales people on the ground to have information on pricing, incentives, and commissions and enterprise resource planning.

The deal, SAP's first in nearly four years, is "a perfect example of the M&A philosophy at SAP," Luka Mucic, finance chief, said in a media call. He said SAP seeks to grow organically, but will buy companies to fill in "those pieces that we were missing in the cloud."

The German business software giant also released fourth quarter earnings showing operating profits were up 1 per cent from a year ago at €1.96bn, a gain of 6 per cent in constant currencies.

New cloud bookings — the key measure for sales success in the cloud — rose 22 per cent to €591m. In constant currencies, growth was 31 per cent.

Mr Mucic said 2017 concluded with margins climbing upwards. Non-IFRS with operating margins in constant currencies, its preferred measure, were 35.2 per cent in the quarter. "This paves the way for the strong growth and margin expansion we expect in 2018 and beyond,” he said.

The Walldorf-based group, which provides backroom-to-boardroom enterprise software to some of the world’s biggest companies, said full year revenues rose 6 per cent to €23.46bn

The Callidus acquisition price of $36 per share marks a 21 per cent premium over its 30-day average. The board of Callidus has unanimously approved the transaction.

SAP said it would fund the deal with existing cash and an acquisition loan. Pending approvals, it should be concluded by the second quarter.

SAP chief executive Bill McDermott called Callidus "the most innovative company in its space" and said the acquisition would enable to SAP to "take over" the customer relationship management industry.

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