Microsoft, SAP Considered Merger

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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