SAP pays $2.4bn for Callidus as it pushes further into cloud

SAP, Europe’s largest software company, announced its biggest acquisition in nearly four years as it seeks to expand its enterprise cloud computing offering and build a one-stop shop for customers at every point in a supply chain.

The German software company said it would pay $2.4bn to acquire Callidus Software, a Nasdaq-listed company from California that gives sales teams real-time data on prices, incentives and product information as it reported fourth-quarter earnings that showed rapid growth in its cloud offering.

SAP has made a series of big acquisitions since 2010, as part of a shift to cloud-based services and to fend off competition from fast-growing rivals such as Salesforce.

The Callidus purchase fills a gap in the group’s portfolio of cloud products, which together form “a virtual suite”, according to chief executive Bill McDermott.

“It’s the combination of what we do that really matters,” he told the Financial Times. “Companies want to run simple — one database, one architecture, one end-to-end process.”

Over the past eight years SAP has spent $28.6bn acquiring a number of cloud-based platforms and database software companies including Ariba, SuccessFactors, Hyrbis and Fieldglass, according to Dealogic. Its biggest takeover was the $8.5bn purchase in 2014 of Concur, a cloud-based travel expenses management company.

The deal was announced as SAP reported fourth-quarter earnings that saw operating profits up 1 per cent from a year ago to €1.96bn, an increase of 6 per cent after taking into account currency headwinds from the strengthening euro.

New cloud bookings rose 22 per cent to €591m, or 31 per cent in constant currencies. For the full year, cloud and support revenue rose 6 per cent to €19.55bn.

Operating cash flow in the year also rose 9 per cent to €5bn but SAP quashed speculation that it would use the extra cash for further big acquisitions.

Luka Mucic, chief financial officer, said acquisitions are actually “even less likely” now.

According to Dealogic, global M&A volume this year has started at its fastest pace since 2000. This deal is the fourth largest tech deal of the year.

SAP shares were little moved in early trading but fell 2.7 per cent in the afternoon.

Morgan Stanley said SAP met expectations but analysts had anticipated even better growth in the cloud following “very positive commentary” in a third-quarter conference call.