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SAP: focus of Ariba deal is growth, not cutbacks

Monday, 1 Oct 2012 | 9:40 AM ET

By Jens Hack

MUNICH, Oct 1 (Reuters) - Top European software company SAP AG said combining its business with Ariba Inc will spur additional growth, as it strives to become the world's largest cloud computing company.

"We are looking for synergies on the revenue side. It's not about cutting costs," Co-Chief Executive Jim Snabe said in a conference call on Monday.

SAP bought business and commerce network company Ariba in a $4.3 billion deal, its latest manoeuvre against Oracle in the fast-growing Internet-based computing market. The deal received regulatory approval on Friday and will be completed this week.

Snabe added that by 2015, SAP aims to generate 2 billion euros ($2.6 billion) in sales from cloud computing, which means offering software, storage, computing power and other services from remote data centres over the Web.

Before 2015 SAP would also become the most profitable provider in that market, Snabe said.

Larger additional takeovers would not be needed to reach those goals.

SAP is taking aim at business-software rival Oracle. Both are vying with Salesforce.com Inc in the multi billion dollar cloud-computing services market, one of the industry's hottest area of growth.

SAP's purchase of Web-based software company SuccessFactors Inc, announced late last year, was seen as accelerating their running battle.

Snabe said that users of Oracle or other rival business software would continue to have access to Ariba, the second-largest cloud platform after SalesForce.

He said that SAP's combined cloud computing business, including SuccessFactors, would aim to widen the margin of earnings before interest and tax over sales beyond Ariba's 18 percent. ($1 = 0.7773 euros)

(Writing by Ludwig Burger)

((ludwig.burger@thomsonreuters.com)(+49 69 7565 1311)(Reuters Messaging: ludwig.burger.thomsonreuters.com@reuters.net))

Keywords: SAP ARIBA/

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