FLASH: $SAP to Buy SuccessFactors $SFSF for $3.4 Billion

SAP of Germany announced plans on Saturday to buy SuccessFactors, a Web-based enterprise software company, for $40 a share, or $3.4 billion.

The all-cash transaction, which is expected to close early next year, offers SuccessFactors’ shareholders a 52 percent premium above Friday’s closing price.

“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse,” Bill McDermott, the co-chief executive of SAP, said in a statement on Saturday.

Deal activity is heating up in the enterprise software industry, as giants like SAP hunt for smaller companies that provide services through the so-called cloud. In late October, for instance, rival Oracle, agreed to purchase RightNow Technologies, a maker of customer service software, for $1.43 billion. It was Oracle’s largest acquisition, since the takeover of Sun Microsystems last year.

SuccessFactors, a provider of employee management software, helps companies assess the performance of their employees, manage recruitment and fulfill other human resource needs. The San Mateo, Calif.-based company, which reported revenue of $91.2 million in the third quarter, has more than 3,500 customers spread across nearly 170 countries.

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