SAP hoovers up Business Objects

SAP has announced it plans to acquire Business Objects in a cash deal valued at slightly more than $6.8bn.

The acquisition, which is expected to close in the first quarter of 2008, is SAP's largest acquisition ever. The deal is especially noteworthy for SAP, which has tended to favour developing its own technology, rather than acquiring it.

The acquisition of Business Objects, a leading player in business intelligence software, is designed to dovetail into SAP's previously announced strategic plans to double its addressable market by 2010, said Henning Kagermann, SAP chief executive, during a press conference.

Nearly a year ago, SAP noted the business intelligence market was growing at a rapid rate. And SAP's customers had been calling on the enterprise applications giant to add an end-to-end solution for structured and unstructured business analytics and embed them into SAP's business suite, Kagermann noted.

He said: "This acquisition accelerates our growth potential."

Forrester Research estimates the business performance solutions market will grow by 11 per cent through 2010.

Business Objects will operate as a standalone business and be part of the SAP Group.

Roughly 40 per cent of Business Objects' customers use SAP, said John Schwarz, Business Objects chief executive.

The companies said there is very little overlap and neither company expects significant restructuring as a result.

With the Business Objects acquisition, SAP will be further positioned to compete against its archrival Oracle. Last March, Oracle acquired business intelligence tool developer Hyperion Solutions in a $3.3bn deal.

At the time of the Hyperion acquisition, Oracle said "thousands of SAP customers" relied on Hyperion for such things as financial analysis and reporting system of record. And that with its acquisition, SAP's customers would need to tie into Oracle's Hyperion software to view and analyse their underlying SAP enterprise resource planning data.

Business Objects' Schwarz, however, noted that his company is roughly three times the size of Hyperion.

Dawn Kawamoto writes for CNET News.com