BREAKING: Concur to Be Acquired by SAP for $8.3 Billion

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Concur

Concur CEO Steve Singh shakes hands with SAP CEO Bill McDermott. Concur

The biggest deal in all of travel in the last few years has just happened: Enterprise business software corporation SAP is acquiring business travel technology firm Concur for a total of $8.3 billion.

Concur CEO Steve Singh announced the acquisition via the company’s blog this evening.

“This relationship will bring new resources and expertise to Concur customers,” writes Singh. “This also expands the opportunity to attract developers and partners to the Concur platform, enabling us to continue to extend the capabilities available to you and your business.”

>> Related: Read the Skift Interview with Concur CEO Steve Singh, Interview: Concur CEO on Making Sense of Business Travel Chaos

Concur expects to receive regulatory approval for the acquisition in later 2014 or early 2015, according to the blog post. Concur is currently expected to operate as part of the SAP organization with leadership reporting to CEO Bill McDermott.

Rumors of the sale were reported by Bloomberg earlier this month. Concur was said to be working with an investment bank on the sale and had approached Oracle Corp. in addition to SAP.

Concur’s ability to give business travelers’ flexibility in where they book was a major factor in SAP’s consideration.

“Concur shares SAP’s vision to help our customers ‘run simple’. Concur cloud solutions are network-based and enable context-aware applications for travelers to use on any mobile device,” McDermott said in the acquisition statement.

Singh shared more about Concur’s ability to do this and his insights on making sense of business travel chaos with Skift last month.

“The patterns we are seeing by cloud computing, by mobile computing, allow the individual to work in the model that they want to work. Embrace that behavior, capture the information that is necessary for them to get the results they are looking for,” explained Singh.

“As a provider you will have to say, I will allow you to work in any model that you prefer. I will deliver all the benefits to you as a traveler and to you as a corporate customer that you are looking for.”

Industry Trend

Concur is one of a number of companies developing web-delivered software to be acquired by SAP, which has spent more than $15 billion buying suppliers of web-delivered applications since 2012, according to Bloomberg.

It is part of a larger industry trend in which traditional software companies are acquiring their cloud computing competitors.

Oracle recently agreed to pay $4.6 million for hotel and restaurant software provider Micros Systems Inc. and IBM acquired SoftLayer Technology Inc. for $2 billion in 2013.

The full release is pasted below:

SAP SE (SAP) and Concur Technologies, Inc. (CNQR) today announced that SAP’s subsidiary, SAP America, Inc., has entered into an agreement to acquire Concur. With more than 23,000 customers, 4,200 employees and 25 million active users in over 150 countries, Concur is the leader in the multi-billion market for travel and expense (T&E) management software. With Concur, SAP’s business network – the world’s largest – will transact more than US$600 billion annually, deliver frictionless commerce across more than 25 different industries and address annual corporate travel spend of US$1.2 trillion worldwide.

The Concur board of directors has unanimously approved the transaction, which is expected to close in the fourth quarter 2014 or the first quarter 2015, subject to Concur stockholder approval, clearances by the relevant regulatory authorities and other customary closing conditions. The per-share purchase price of US$129 represents a 20% premium over the September 17 closing price, a 21% premium over the one month volume weighted average price per share and an enterprise value of approximately US$8.3 billion. The transaction will be funded from a credit facility agreement of up to €7 billion to cover the purchase price, target debt refinancing and acquisition-related costs. The company has undergone an external credit rating process with two agencies. The results of this process will be published shortly.

“The acquisition of Concur is consistent with our relentless focus on the business network,” said Bill McDermott, CEO of SAP. “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. We are redefining how businesses conduct commerce across goods and services, contingent workforces, travel and entertainment. With the SAP HANA platform, the possibilities to innovate new business models around Concur and the network are limitless.”

“Concur shares SAP’s vision to help our customers ‘Run simple’,” added McDermott. “Concur cloud solutions are network-based and enable context-aware applications for travelers to use on any mobile device. With Concur, people are given the professional courtesy and ultimate flexibility to make the choices that are right for them. No longer does cost control for companies have to come at the expense of people.”

“We have always been focused on making solutions for real customer problems, and with SAP we have a great opportunity to advance that mission,” said Steve Singh, CEO of Concur. “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.”

Scaling the Business Network

  • Concur will expand SAP’s business network to reach into the US$1.2 trillion corporate travel spectrum.
  • Concur has developed an open platform to connect the corporate travel ecosystem, such as airlines, hotels and car rental companies in new and innovative ways.
  • With the addition of the corporate travel ecosystem to the Ariba and Fieldglass networks, SAP’s business network will have an opportunity to power transactions that drive more than US$10 trillion of global spend annually.
  • With SAP HANA®, Concur anticipates real-time network collaboration that will reshape the travel value chain, create new business models and eliminate needless complexity confronting millions of business travelers worldwide.
  • SAP applications touch two-thirds of global commerce; combined with the power of SAP HANA, SAP is uniquely positioned to make the “real-time networked economy” a reality.
  • Achieving Significant Business Synergies
  • Together the two companies will have more than 50 million users in the cloud — more than any enterprise cloud company — and will be the second largest cloud company by measure of revenue.
  • Concur has a revenue run rate of more than US$700 million. With its global reach in every country around the world, SAP will provide a global platform to scale.
  • The majority of SAP customers do not run Concur, presenting a clear opportunity to scale as part of the SAP franchise.
  • Only 30% of Concur customers currently run SAP, presenting a dynamic opportunity to introduce SAP innovations to the Concur install base.
  • With one of the richest T&E datasets in the industry and the potential of the SAP HANA platform, Concur will deliver unique insight and analytics to business expense wherever it occurs.
  • With the dominance of the mobile device in travel and entertainment, Concur will collaborate with SAP’s innovation leadership to build network-based, context-aware mobile applications.
  • SAP will migrate all its corporate travel and expense management to Concur’s integrated solutions.

Investing for Business Growth

The Concur platform has a broad, horizontal impact with the customer base of more than 23,000 enterprises covering every one of SAP’s 25 industries and all company sizes.
In June 2012, Concur was awarded a 15-year contract to supply T&E software to multiple federal agencies. SAP, with government customers numbering in the tens-of-thousands, intends to expand this relationship across the globe with other governments and agencies.

In the small and medium business space, Concur solutions will complement the new SAP Business One® Cloud solution powered by SAP HANA to offer a compelling suite of solutions for businesses of all sizes.

Skift Take: This is the biggest M&A deal to occur within the travel industry in the past few years and will have a ripple effect throughout the sector.

— Rafat Ali

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