Shares in German computer software maker SAP fell more than 5 percent on Monday on market skepticism about the merit of SAP's plans to buy Franco-American peer Business Objects, analysts said.
Dealers said a profit warning
Early Monday, SAP shares traded 5.2 percent lower at $55.66 (39.48 euros), having hit a session low of $55.20 (39.15 euros).
Business Objects stock, whose trading was delayed on Monday, was indicated up 16.6 percent at $54.28 (38.50 euros) in Paris. By midmorning, it had gained 17.2 percent to $57.82 (41.01 euros) after climbing as high as $57.92 (41.08 euros), leading advancers on the Paris bourse.
SAP, the world's largest maker of business software applications by market share, said on Sunday it had agreed to acquire smaller peer Business Objects for a total $6.8 billion.
It said the primary driver for the acquisition, its biggest and a reversal of its strategy of organic growth, was the potential to gain new business.
The 42 euros-per-share ($59.22) offer represents a 20 percent premium over Business Objects' closing price on Friday.
"We are surprised that SAP always repeated its mantra of organic growth and finally decided to acquire Business Objects," UniCredit said in a note to clients.
It added the price was a clear premium to the average in comparison with recent acquisitions in the software industry.
"The move is contradictory to
Analysts at brokerage Kepler said the move was viewed negatively due to the high price, and Oliver Finger, an analyst at DZ Bank, said the deal increased SAP's risk premium.
But analysts at Landesbank Baden-Wuerttemberg said that, even though they expected the profit warning to burden the shares and raise doubts over the rationale of the transaction short-term, it made sense that SAP made use of the possibility to reach a market-leading position in the business-intelligence sector.
Business Objects, whose business-intelligence software helps companies to mine mountains of data to detect market trends, reported preliminary third-quarter results, just after SAP's takeover announcement, that fell short of expectations.
It said it would report earnings per share of 36 to 39 cents, compared with the average estimate of 51 cents in a Reuters poll of analysts.
Sales would be between $366 million and $370 million, also below the poll's average of $385.1 million.
Business Objects has more than 43,000 customers, according to its own data, and made 2006 sales of $1.25 billion. It says about 40 percent of its customers are already customers of SAP.
"The strategic interest of this offer for SAP is such that one cannot rule out a counter-bid from IBM, Microsoft, even Oracle," CM-CIC Securities analysts said in a note.
Database software leader Oracle has spent more than $20 billion in recent years on buying companies to challenge SAP's lead in software that helps enterprises manage functions such as human resources, supply chains and customer relations.
Oracle acquired Hyperion Solutions, a smaller competitor to Business Objects, for about $3.3 billion earlier this year. Oracle on Sunday declined comment on whether it would make a counter-bid for Business Objects.
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