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Note 4 - Business Combinations
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12 Months Ended | ||||||||||||||||||||
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Dec. 31, 2011
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| Disclosure - Note 4 - Business Combinations | |||||||||||||||||||||
| Disclosure of business combinations | (4) Business Combinations
In 2011, we concluded the following business combinations:
Acquired Businesses
All transactions were immaterial to SAP individually and in the aggregate. All of the acquired businesses develop and/or sell software in specific areas of strategic interest to us or complement our service portfolio.
Business combinations of the prior year are described in the Notes to our Consolidated Financial Statements for 2010. We disclosed that the fair values of the deferred taxes and liabilities relating to legal and litigation related liabilities were provisional. The valuation was completed in 2011. Adjustments to the allocation of the acquisition price resulted in the immaterial changes to amounts reported in the prior year.
Acquisitions After the End of the Reporting Period
On February 21, 2012, we acquired more than 90 per cent of the outstanding ordinary shares of SuccessFactors, Inc. (NYSE: SFSF) and obtained control of SuccessFactors. Subsequent to the acceptance of the tender offer we effected a short-form merger and acquired the remaining shares for the same $40.00 per share price that was paid in the cash tender offer. Taking into account all components, we estimate the total consideration to be transferred to be USD 3.6 billion (€2.75 billion), all of which is paid in cash. Acquisition-related costs (to be included in general and administrative expenses in our income statements) approximate €12 million (thereof €3.8 million recognized in 2011).
SuccessFactors is a provider of cloud-based human capital management (HCM) solutions. As a result of the acquisition, we expect to significantly accelerate our momentum as a provider of cloud applications, platforms and infrastructure and to establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.
The initial accounting for the business combination is incomplete at the time the financial statements were authorised for issue. Based on preliminary valuations of the assets acquired and liabilities assumed in the acquisition, we expect to acquire assets of approximately €0.9 billion to €1.1 billion, including identifiable intangible assets ranging from €0.7billion to €0.8 billion and cash of approximately €0.1 billion. The assumed liabilities are expected to range from €0.5 billion to €0.7 billion. We estimate that goodwill resulting from this acquisition will range from €2 billion to €2.5 billion. The goodwill recognised is not expected to be deductible for income tax purposes. Due to the fact that valuations of assets, liabilities and contingencies are ongoing, the presented figures may change significantly.
The goodwill arising from the acquisition consists largely of the synergies and the skills and technical talent of SuccessFactors' workforce. The allocation of goodwill to our reportable segments will depend on our final management structure which has not yet been determined.
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