ORACLE BID FOR SAP?

A rumor has surfaced that Oracle Corp is preparing a bid to take over SAP AG and bizarre though the idea seems, it helped send the German stock market up by around 15 points, or 0.23%.

The oddly specific rumor had it that Oracle was preparing to offer 38.5 euros ($49.78) per SAP share. The speculation sent SAP shares up by 1.7% by midday, to 36.23 euros.

Although Oracle would dearly like to remove its closest competitor from the market, there is unlikely to be any substance to the speculation because the combination of the two enterprise application leaders would create a near-monopoly and would almost certainly be seen as breaching antitrust law in both the US and Europe.

Oracle’s acquisition of PeopleSoft three years ago sparked intense antitrust investigations and the company has since then acquired even more market share through its ongoing series of acquisitions.

According to estimates from AMR Research, SAP had 43% of the $29bn worldwide ERP market by the end of 2006, with Oracle coming in at 23%. The next closest vendors were Sage at 5% and Microsoft at 4%.

There would be other hurdles too. When SAP and Microsoft admitted they had considered merging, they said they decided not to pursue the idea because of the complexities of bringing two huge operations together. The situation would be no different with a SAP/Oracle combination, despite Oracle’s growing experience in mega acquisitions such as PeopleSoft and Siebel Systems.

Market leading vendors like SAP and Oracle are having growth issues in the area of new software sales, and discussions in the market in general about how they might address them could have given rise to the Oracle bid rumor.

Last month, Oracle reported that sales of new software fell short of analysts expectations and earlier this month SAP revealed that revenue was below analysts expectations and that for the full year 2006 software sales rose 11% rather than the predicted 15% to 17%