Tim Mueller’s Transaction Analysis: New IT M&A Deals Feb. 5

SAP Acquires CallidusCloud for $2.4B

Financial Information*

  • Enterprise Value ~$2.4B
  • EV/LTM Revenue 10.04x
  • EV/LTM EBITDA NM

Transaction Facts

  • Europe’s largest software company SAP (NYSE:SAP) announced yesterday that it had acquired cloud-computing firm CallidusCloud (Nasdaq: CALD) for $36 a share, a total of ~$2.4B or a 21 percent premium over Callidus’ 30-day weighted average share price.
  • The deal is expected to close in the second quarter.
  • Shares of Callidus jumped yesterday morning on the news that it would be acquired, and finished with a gain of 3.25 at $35.95 on the highest volume of the year. The company’s stock also made its third consecutive new high for the year.

Fortifying Brand through M&A

  • Strategic Transition: The German ERP giant has been strengthening its base of cloud-based services through M&A, making a series of large acquisitions. The Callidus acquisition is SAP’s biggest in nearly four years, while its biggest purchase was of cloud-based travel expenses management firm Concur in 2014 for $8.5B. Over the past eight years, SAP spent ~$28.6B purchasing cloud-based platforms and database software companies. Acquired companies include Ariba, SuccessFactors, Hybris, Gigya and Fieldglass. null
  • Strong Exit: Founded in 1996 and publicly listed in 2003, Callidus has also developed a strong taste for M&A, acquiring 14 companies over the past eight years (Callidus acquired four in 2017 alone).
  • More Pressure: Along with its full-year results and acquisition announcement, SAP released its results for the final quarter of 2017. Revenues grew 1% over the prior year period to ~$8 billion, with revenues from new cloud bookings as a strong driver in growth. In addition, the company continued its success in the ERP software market as more than 1,000 customers adopted its S/4HANA platform this quarter, bringing the overall count to more than 7,900 customers.

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