Enterprise software giant SAP will spend $8.3 billion to get its hands on corporate travel-and-expense (T&E) management tech company Concur.
The deal values Bellevue, Washington-based Concur at $129 a share -- a premium of 20% above its September 17 closing price.
SAP CEO, Bill McDermott, says:
"We are making a bold move to innovate the future of business within and between companies. With Ariba, Fieldglass and Concur, SAP is the undisputed business network company."
The deal is expected to close in the fourth quarter of 2014 or first quarter of 2015.
Steve Singh, Concur CEO, adds:
"We are constantly seeking innovative ways to deliver the best customer experience and we’re excited about leveraging SAP technology, including HANA as we scale globally....
"SAP delivers software and services to more than 261,000 companies around the world, and this relationship will bring new resources and expertise to Concur customers...."
The most obvious first customer will be Germany-based SAP, which will move its corporate travel-and-expense management to Concur's integrated solutions.
The merger also has opportunities in the other direction: Only 30% of Concur customers currently run SAP.
Concur claims to have penetrated only 25% of the total T&E market capacity. It has partnerships with many major brand names, such as IBM, Uber, American Express, and United.
On the conference call, Singh highlighted that the US government continues to look for commercial-grade software that it can run on what he says is a more cost-effective model than past methods.
He says Concur and SAP will be focused on aggressively pursuing T&E contracts with governmental entities, including civilian agencies worldwide. SAP has thousands of government contracts that could be cross-sold to Concur's products.
Concur, which has 23,000 customers and claims a revenue run rate of $700 million, is planned to operate as part of SAP, reporting at first to the Office of the CEO at SAP.
During the call, McDermott praised Concur's signature product: TripIt, as an expense-based solution particularly because it was a context-aware mobile tool.
For instance, if your flight is delayed, the TripIt app can alert you when your flight has changed and to push flight recommendations. Integration with American Express enables instant updating to a business traveler's expense report.
McDermott also praised TripLink, its corporate travel platform tool.
The acquisition could potentially trigger some uncertainty about what will happen to the Concur’s $150 million Perfect Trip Fund and the entire concept of Concur investing in other startups that it considers innovative in the travel sector, such as fare-and-hotel-price-tracking tool Yapta.
See Tnooz's recent Q&A with Concur CEO Singh.