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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004

SAP AG confirmed today that Microsoft tried to acquire it beginning late last year. The German enterprise software vendor acknowledged that, during the course of continuous discussions with Redmond about a development partnership for Web services, Microsoft broached the idea of merging. The companies terminated these exploratory discussions this spring.

The information was revealed during the Department of Justice’s anti-trust lawsuit against Oracle. The DoJ wants to block Oracle’s hostile takeover of rival PeopleSoft, saying that would leave only Oracle and SAP as ERP software vendors. Part of Oracle’s defense is that the DoJ’s definition of the ERP market is too narrow; Oracle thinks Microsoft and IBM should be included, as well as secondary players like Fidelity and Ceridian.

Microsoft is steering clear of the debate. In a statement, the company said that it will “in this instance depart from its longstanding policy of not commenting on discussions related to potential mergers and acquisitions.” This is the result of confidential information that Oracle is expected to raise at the trial.

Henning Kagermann, SAP chairman and CEO, said in a statement that exploring the possibility of a merger was part of the company’s normal evaluation of opportunities. “SAP has the firm intention of cooperating further in partnership with Microsoft,” Kagermann said.

Microsoft also confirmed that it initiated preliminary discussions with SAP late last year to explore the possibility of a potential merger. The company said it ended these “due to the complexity of the potential transaction and subsequent integration.”

While the merger issue is off the table, further discussions resulted in the May announcement of a road map for deeper integration between Microsoft .NET and SAP NetWeaver. The two companies will develop software toolkits and other tools that will let Visual Studio .NET developers build SAP applications and increase interoperability between SAP products and Microsoft Office.


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