Having spent more than $42 billion to buy about 60 companies, Larry Ellison’s Oracle has set something of a daunting standard for merger activity in the business software industry. So while SAP’s plan to buy smaller business software maker Sybase for $5.8 billion may not roil markets, it could certainly shake up things in an already busy infotech sector.
With Sybase, SAP gets a boost in mobile technology, but will also end up with a big database business that provides steady revenues but little else on which SAP can grow its business.
The database chunk is by far the bigger earner for Sybase, with the mobile aps business accounting for only a little over a quarter of annual revenue, so it could make an attractive business for SAP to hive off. Breakingviews columnist Robert Cyran points out that keeping a hand in the database world could also prove awkward for SAP as it exacerbates competitive friction with its allies, Microsoft and IBM.
SAP could also look to sell the database business to cash up for any more strategic moves. Given this is the second-biggest deal for SAP in its nearly 40-year history, and marks the first big move since a management shakeup, the sandbox that so recently seemed to be Larry’s exclusive territory is only going to become more crowded.