SAP-Microsoft Mega-Merger Rumor Surfaces, Then Dies

Published: December 5, 2007

by Alex Woodie

Could software giants Microsoft and SAP be preparing for a mega-merger, like the one they considered and decided not to do four years ago? They are, according to a rumor that circulated early this week. But the rumor was quickly quashed by SAP's CEO.

The rumor started circulating on Monday, and was deemed valid enough by stock traders to start buying shares of SAP, whose stock price rose nearly 2 percent. A story about the rumor and the stock run-up by the business news organization Reuters followed several hours later, which may have added fuel to the fire.

Asked about the rumor at a press conference in Boston yesterday, SAP CEO Henning Kagermann said there no such talks between the two software companies.

But they have considered the merger before.

Details of merger talks between Microsoft and SAP were made public in the spring of 2004 as the result of the pretrial discovery phase of the U.S. Department of Justice's lawsuit to block Oracle's takeover bid of rival PeopleSoft.

When details of the preliminary talks were made public, Microsoft issued a statement that the companies nixed the plan "due to the complexity of the potential transaction and subsequent integration." Microsoft also said there were no intentions to resume the talks.

While the cost of a merger and the complexity of integration between such large and culturally disparate organizations have only increased during the ensuing three years, the idea of a joint Microsoft-SAP company ruling business IT from the biggest ERP installations to practically every client PC, just is too good to put to rest, apparently.

SAP co-founder Hasso Plattner left open the idea of a buyout of SAP during an interview last year with the Financial Times. And there have been no shortage of other rumors about other potential solicitors to SAP, including Oracle, its arch rival in the ERP space, and IBM, where SAP's founders got their start.

But during the FT interview, Plattner made it plain who SAP preferred, should it decide to sell out. "There are only three potential buyers: IBM, Microsoft and Google," he said.

Now all we need is a Google-SAP mega-merger rumor.

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