SAP America to buy Callidus for $2.4 bln

German business software group SAP SE said on Monday its unit SAP America Inc will buy cloud-based human resources software company Callidus Software Inc for a total enterprise value of $2.4 billion.

The deal represents a per share purchase price of $36, which is a premium of about 10 percent to Callidus’s Monday close of $32.70.

The deal is expected to be essentially neutral to SAP’s non-IFRS earnings per share for fiscal 2018, SAP said.
The transaction will add to SAP’s non-IFRS earnings per share for fiscal 2019, the German company added.

SAP said it planned to fund the deal with existing cash balances and an acquisition term loan.

Callidus Software, which does business as CallidusCloud, said its board has unanimously approved the transaction.

Acquiring U.S. sales software firm Callidus will help SAP in its ambition to become the market leader in so-called front-office software used in sales and marketing, building on its strength in back-office software that is used by companies to maintain control over far-flung multinational operations.

In an interview at SAP’s sprawling campus in Walldorf, Germany, CEO of SAP Bill McDermott said SuccessFactors, the human resources application acquired by SAP for $3.4 billion in 2011, would be fully migrated to the cloud this year.

“This year, the entire company will be on one platform,” McDermott told after SAP announced 2017 results that met its twice-raised guidance but came in just shy of analyst expectations. He described Callidus as a “tuck-in” deal that would not move the needle on revenues but that he valued for the company’s market leadership and innovation.

As Callidus was on the cloud, it would help SAP achieve a 2020 goal of having “predictable” revenues of 70 to 75 percent of the total. These grew by 1 percentage point to 63 percent in 2017.

“We did that to get another cloud revenue stream in the mix,” McDermott said.

All of SAP’s regional businesses are growing at double digits, McDermott said, highlighting “hyper growth” in China.

SAP said it expected total non-IFRS revenue of 24.6 to 25.1 billion euros ($30 bln-$31 bln) for 2018.

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