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Microsoft + SAP: The Acquisition That Never Happened

Microsoft + SAP: The Acquisition That Never Happened

In one of those strange ironies beloved of the business and technology world, the primary reason given for why Microsoft and SAP didn't end up as one company, despite Microsoft having taken a close look at such a prospect earlier this year...is that it would have proved too difficult to integrate the two businesses.

So much for The Age of Business Integration and all the software sold worldwide to support it.

Secret talks between the two companies apparently began late last year but ceased a few months ago "due to the complexity of the potential transaction and subsequent integration," Microsoft said yesterday in a statement.

Had Microsoft bought SAP the result would have been an 80,000-strong worldwide workforce, compared to IBM's 255,000. SAP has a market cap of nearly $50 billion.

Cynics are already speculating that it was a no-lose move by MS since now the entire world's ERP vendors, knowing that Microsoft "nearly acquired" SAP, will now fall over themselves to program .NET interoperability into their ERP packages to make themselves more attractive to MS for buyout - giving the Redmond-based company a helping hand in its fight for market share in the enterprise computing market.

Microsoft has already bought two of SAP's rivals in billion-dollar acquisitions - Great Plains Software, which it acquired for $1.1 BN in 2001 and Navision, which it bought for $1.3 BN the following year. The disclosure about MS having opened talks with SAP arose in connection with the US Justice Department's antitrust suit aimed at blocking Oracle's proposed takeover of PeopleSoft. Oracle's argument is that it gives the lie to Microsoft's contention that it only has designs on SMBs, but not full-fledged enterprise customers. Which in turn is why Oracle should be allowed to go ahead, says its lawyers.

In answer to the inevitable question as to whether any Microsoft + SAP deal would have been billed as an "acquisition" or a "merger," a joke has already begun doing the rounds of Interner message boards:

Q: What do you get when you merge Microsoft and SAP?
A: Microsoft. 

 

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Most Recent Comments
rewt66 06/08/04 09:15:46 AM EDT

Once Oracle went after PeopleSoft, it was pretty much inevitable that Microsoft would at least start looking at SAP.

IT Complexity 06/08/04 09:14:32 AM EDT

There''s an article in the London-based Financial Times that says:

"Microsoft says the discussions were halted due to the complexity involved in the transaction and in integrating the two companies. A merger with SAP would be a profound break with previous Microsoft strategy, and would likely have raised eyebrows among regulators."

samantha 06/08/04 08:05:54 AM EDT

What little experience I have had with SAP is that it is the king of archaic over-priced bloatware. Microsoft would have choked and died attempting to absorb it. This would have gotten rid of two ugly giant blights on the industry at once. Too bad it didn''t go through.

TrueLove 06/08/04 08:04:05 AM EDT

After eyeing up SAP for a year or two Microsoft plucks up the courage and asks SAP for a date.. they both have dinner together in a fancy restaurant but conversation is dull and they avoid eye contact all night, SAP looks bored, Microsoft eyes up the waitress all night while SAP eyes up the bartender.

Microsoft pays the bill and SAP contributes to the tip.
Both go home alone, end of story.

Wegge 06/08/04 08:03:25 AM EDT

I''ve always had the impression that the policy from Redmond was to find the "sweet spot" for their back office applications. In this case, the best target is probably a notch or two down from the customers who are willing to bay a SAP solution.

Whatever the reasons might be, MS in fact went ahead and bought Navision Financials instead, which probably was better for the overall backoffice strategy.

//Wegge