SAP AG, Sybase Inc. to Merge

SAP AG announced it has agreed to buy Dublin, Calif.-based Sybase (News - Alert) Inc. for roughly $5.8 billion in a tender offer for Sybase at $65 a share, a 44 percent premium over the shares' three-month average price.

The deal, according to the companies, will be made using SAP (News - Alert)'s cash on hand, and a $3.47 billion loan facility. Sybase will operate as a standalone unit, and its management team will remain in place.

The deal has been approved by Sybase's board and the companies expect to close in June.

Altimeter Group analyst Ray Wang said SAP's purchase of Sybase 'signals their seriousness to acquire key, innovative technologies.'

Through the merger, Wang noted, SAP is gaining 'access to the financial services market in China,' where Sybase has a significant presence.

The duo have partnered in the past, in March 2009 it was announced that they would provide business software to mobile devices.

SAP surprised investors in February by announcing that former CEO Leo Apotheker was stepping aside after serving only seven months on the job and it is currently being run by co-CEOs McDermott and Jim Hagemann Snabe, who have cited a need to change the company's culture and foster better execution.

The company has struggled to with its 'Business ByDesign' product, an on-demand service aimed at mid-sized businesses that has experienced delays, for example.

In April Sybase reported its first-quarter profit surged 42 percent, for another record quarter on strong demand across all product lines and geographies as the company continues to see stabilization.

The maker of databases and products that manage mobile-phone systems also raised its year earnings forecast and projected second-quarter results in line with expectations.