SAP is buying Bellevue-based Concur Technologies in deal valued at $8.3 billion, a 20 percent premium over the Sept. 17th closing price.
Founded in 1993, Concur successfully transformed itself into a software-as-a-service company, building a powerhouse in the travel and entertainment expense management category. The company’s online tools are now used by 23,000 customers worldwide, with 4,200 employees globally. Its revenue run rate now stands at $700 million.
Shares of Concur have been relatively flat over the past year, but the company’s stock is up more than 175 percent in the past five years. Bloomberg News reported earlier this month that Concur was for sale, pointing specifically to SAP as a possible suitor.
Together, SAP and Concur will have more than 50 million users in the cloud, and it will be the second largest cloud company by measure of revenue, the companies said. In a call with analysts today, SAP CEO Bill McDermott said that after the transaction closes, SAP’s business network will transact more than $600 billion annually, which is 50 percent more than Amazon, eBay and Alibaba combined.
He said that the deal — which he dubbed the largest in the history of software-as-a-service — makes SAP the “undisputed” business network and cloud leader.
“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 Concur CEO Steve Singh in a press release. “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.”
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McDermott offered kudos to the Concur management team, calling them “as good as it gets.” He said he fully expects the management team and employee base at Concur to join SAP.
In the conference call, Singh said that Concur was “not up for sale.”
“Great companies are acquired, they’re not sold,” said Singh, adding that the synergies between SAP and Concur are “substantive.” With more than 250,000 businesses operating on the SAP platform, Singh said that there was a tremendous opportunity to push the Concur service to new customers. Concur’s technology already ties into SAP, he said.
“There is a tremendous opportunity to drive scale,” said Singh, adding that “you win with scale.”
The deal marks one of the largest acquisitions of a Seattle area technology company in recent years, surpassing the $6 billion that Microsoft paid for aQuantive in 2007 and the $2.25 billion that EMC paid for Isilon in 2010. Interestingly, GigaOm reports that Concur talked to both Microsoft and Oracle about a deal as well.
It also established a $150 million venture fund in 2012 to bankroll emerging startups in the online travel arena, including Seattle area startups such as Buuteeq (recently sold to Priceline) and Yapta.
A press conference has been slated for 3 p.m. today, and we’ll have more on this breaking story as it develops. Here’s the full press release from SAP.
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 travelers 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 travelers 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
- The Concur platform has a broad, horizontal impact with the customer base of more than 23,000 enterprises covering every one of SAP’s 25 industries and all company sizes.
- In June 2012, Concur was awarded a 15-year contract to supply T&E software to multiple federal agencies. SAP, with government customers numbering in the tens-of-thousands, intends to expand this relationship across the globe with other governments and agencies.
- In the small and medium business space, Concur solutions will complement the new SAP Business One® Cloud solution powered by SAP HANA to offer a compelling suite of solutions for businesses of all sizes.
Financial Analyst and Media Conference Call
SAP and Concur will host a conference call for financial analysts and media to discuss the transaction on Thursday, September 18, 2014 at 3:00 PM (PDT) / 6:00 PM (EDT) / 11:00 PM (London) / 12:00 AM (Sept 19) (CET). The call will be webcast at www.sap.com/investor.
And here’s a message that Steve Singh of Concur posted on the company blog today:
I’m excited to share that earlier today, we entered into an agreement to be acquired by SAP. 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.
SAP delivers software and services to more than 261,000 companies around the world, and this relationship will bring new resources and expertise to Concur customers. This also expands the opportunity to attract developers and partners to the Concur platform, enabling us to continue to extend the capabilities available to you and your business. We expect our focus on innovation and on the success of our customers to be even stronger in the years ahead.
SAP’s “Run Simple” philosophy aligns well with our desire to deliver effortless solutions that help you to focus on what matters, the success of your business.
We expect to receive regulatory approval on the transaction late in 2014 or early in 2015. We will provide you with more details in the coming months. Post the close of the transaction, Concur is currently planned to operate as part of the SAP organization, initially reporting to the Office of the CEO at SAP.
We value your feedback, and our whole leadership team, along with our account managers, is available to answer any questions you may have. We remain 100% committed to your success and thank you for your business.