Microsoft and SAP were in merger talks

Microsoft and SAP were in discussion about a possible merger as recently as this spring. The companies have both issued press releases to that effect, stating that Microsoft approached SAP late in 2003, but that talks ended three months ago, with no plans to resume. The revelation is the first of what may be several glimpses behind the commercial scenes of big IT businesses, driven by release of information on the run up to the Oracle/PeopleSoft case in the US. While companies don’t usually comment on merger talks, information about the Microsoft-SAP discussions was gathered during the pre-trial discovery process. Press releases were then issued “because of the possible disclosure of confidential and proprietary information during court proceedings.” Although the merger talks were discontinued, SAP and Microsoft have now entered a joint development partnership around Web services and a patent cross licensing agreement, which were announced on May 12, 2004. “SAP, like all publicly held corporations, routinely evaluates potential opportunities to strengthen its leading position in the enterprise software market, and the disclosure made today should be interpreted this way,” says Henning Kagermann, SAP CEO. Commenting on the bombshell, analyst AMR Research’s Bruce Richardson says that while interesting, a Microsoft and SAP combination “would have a hard time making it past legal hurdles in the United States and Europe. Oracle merging with PeopleSoft would be miniscule next to the mammoth Microsoft-SAP combination.” AMR expects other disclosures, including “one or more ‘white knights’ that have been approached about possibly merging with PeopleSoft.”