German software giant SAP is set to buy a rival, California-based Sybase, giving it a boost in its ongoing rivalry with Oracle Corp.
SAP is looking for a leg up against rival Oracle
The Sybase board has rubber-stamped the deal, valued at $5.8 billion (4.6 billion euros), but the approval of SAP shareholders and regulators is still required.
SAP is offering $65 a share for Sybase - a nearly 16 percent premium on Wednesday's closing price. The all-cash offer is being made by SAP's US unit, SAP America. SAP said it would fund the purchase with cash on hand and a 2.75-billion-euro loan facility from Barclays Capital and Deutsche Bank.
Focus on mobile market
SAP is the world's biggest maker of programs for managing business tasks such as accounting. Sybase is the fourth-largest provider of database software. The acquisition will give SAP a high-performance database along with programs that companies use to deliver corporate software to mobile devices. Sybase is also one of the world's biggest processors of mobile text messages.
The global market for mobile devices is growing
The deal represents SAP's largest purchase since it bought Business Object of France in 2007, for 4.8 billion euros. News of the acquisition sent Sybase shares soaring.
SAP expects the acquisition to give it a better placement in its mobile-devices business and therefore help it gain ground against rival Oracle, which currently has a strong advantage in the sector.
Match made with 'magic'
"SAP will accelerate the reach of its solutions across mobile platforms," SAP said in a statement explaining its move. "Sybase's innovative mobile platform can connect all applications and data and enable them on mobile devices."
And SAP Co-Chief Executive Bill McDermott said in a conference call with Germany's DPA press agency: "We don't need to cut costs to make it work. That's the magic."
"We see a huge emerging market for real-time mobile devices," McDermott said, predicting that the mobile Internet would grow to 10 times the size of the desktop Internet.
Editor: Nancy Isenson