German enterprise software maker SAP announced that its subsidiary, SAP America, has entered into a definitive agreement to scoop up SuccessFactors, a provider of cloud-based human capital management (HCM) solutions. Under terms of the agreement, SAP will acquire all outstanding shares of common stock of SuccessFactors for $40 per share, valuing the deal at a staggering $3.4 billion.
The share price is equal to a 52 percent premium both over the December 2nd closing price and the one month volume weighted average price per share. SuccessFactors didn't need to hire an economist to figure out they're on the receving end of a good deal, and it should come as no shock that the company's board of directors unanimously approved the transaction.
According to SAP, SuccessFactors operates the largest scale of paying cloud users with 15 million subscription seats. The company claims more than 3,500 customers in 168 countries and recorded 77 percent growth year-over-year in the third quarter of 2011, and 59 percent year-over-year in the first nine months of 2011.
Still, $3.4 billion is a lot of scratch, though there's plenty of upside. VentureBeat's Matt Marshall listed nine reasons why he thinks this is a smart acquisition, the first one being that talent management is a key area of growth in the economy moving forward. It's also important to note that SuccessFactors will run independently with a SaaS subscription model, which gives SAP a way out of relying so heavily on its on-premise business model.