SAP chiefs vow to defend independence

SAP’s co-chief executives have vowed to defend the group’s independence through rapid growth in sales and market capitalisation, seeking to play down takeover speculation.

In a rare joint interview, Jim Hagemann Snabe and Bill McDermott told the Financial Times that the German group’s jump in market value since they took over in February last year had given it enough “swagger” to be shielded from a takeover.

“We do things that move the company forward, whether that is organic, through partnerships or joint ventures, or even M&A,” said Mr McDermott.

“If we do that we will continue to grow, continue to be properly valued by capital markets and we will stand very strong on our own feet.”

The world’s largest business software maker by sales, has seen its share price rise by more than a third since the management duo took over 14 months ago. SAP’s market value has increased to €55bn ($79bn) but this increase has done little to dampen rumours that it could eventually fall prey to consolidation in a maturing technology sector.

Such speculation was fuelled late last year when Léo Apotheker, the pairs’ predecessor, took the helm at Hewlett-Packard, the US computer group, and subsequently announced a further push into software.

Mr McDermott, however, said the valuation gap between HP and SAP had almost been closed, with the former only being €7bn ahead in market capitalisation. “We get to the point where we appreciate the compliment that we are a jewel in the crown, but we do have some swagger on our own,” the 49-year-old manager said.

Analysts have said management need to prove to its three founders – which still hold 24 per cent of the shares – the viability of the group’s standalone strategy.

The co-chief executives’ words are the strongest sign yet of regained confidence at SAP, which had suffered from a loss in business momentum and customer and employee trust before Mr Snabe and Mr McDermott had taken over.

Management earlier this year set a target to catapult sales from €12.5bn last year to €20bn within the next five, thanks to a product offensive aimed at broadening the group’s customer base and expanding into mobile devices.

Mr Snabe said SAP would use its Sapphire conference in May to unveil mobile applications that would be based on a platform from Sybase, the US mobile solutions specialist it bought last year in a $5.8bn deal.

“The medicine that we are taking is to continuously improve the way we are run, how we innovate and how we deliver value to our customers,” Mr Snabe said.

“If we do that, then we can stay independent.”

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