Software as a Service (SaaS)

Microsoft launched a takeover bid on Feb. 1 of $31 per share in cash and stock, a 62 percent premium over Yahoo’s previous day’s closing price. A New York Times article cited Michael Cusumano, professor at the Sloan School of Management at the Massachusetts Institute of Technology, suggesting that Microsoft should instead use the M&A strategies of SAP rival Oracle as an example.

By Tyler Sitte

Shares in SAP (NYSE: SAP)  were lower in morning trade as dealers said talk about possible future acquisitions for the software manufacturer was offsetting merger and acquisition speculation concerning the unlikely takeover from software giant Microsoft (Nasdaq: MSFT)  .

“Jitters about a possible expensive takeover by the software company are helping to put pressure on its shares,” said a Frankfurt-based trader.

He said the jitters were offsetting a report in this Sunday’s New York Times that Microsoft is going after the wrong target, with its takeover attempt of Yahoo (Nasdaq: YHOO) , and it should instead try to buy SAP.

Integration, Then Negotiation

In an interview with the Handelsblatt newspaper, SAP chief executive Henning Kagermann said the company is open for any further acquisitions but it would first have to integrate Business Objects before looking around for any further deals.

In late-morning trading, shares in SAP were 0.06 Euros, or 0.18 percent, lower at 32.45 euros (US$48.12), making it the third worst performer on the DAX, which was down 112.91 points or 1.66 percent at 6,919.20.

Microsoft launched a takeover bid on Feb. 1 of $31 per share in cash and stock, a 62 percent premium over Yahoo’s previous day’s closing price.

Follow Oracle’s Lead?

The New York Times article cited Michael Cusumano, professor at the Sloan School of Management at the Massachusetts Institute of Technology , suggesting that Microsoft should instead use the M&A strategies of SAP rival Oracle (Nasdaq: ORCL)  as an example and “should acquire another major player in business software, merging Microsoft’s strength with that of another.”

“It’s not an outlandish idea,” the report said.

“The two companies held merger talks in late 2003, and perhaps since then, too. Microsoft is in an enviable position: It is a nearly universal presence in corporate data centers, and large enterprise customers are arguably the best customers a software company can have.”

“This all sounds very interesting,” said a local trader in response to the article, “but the stock is really not reacting on the news.”

CRM News: Deals: SAP Called Better Target Than Yahoo for Microsoft