December 5, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Ariba (Nasdaq: ARBA ) soared as much as 16% in early trading on heavy volume, after German software supplier SAP (NYSE: SAP ) announced plans to acquire online HR specialist SuccessFactors (Nasdaq: SFSF ) for $3.4 billion.
So what: Issues notwithstanding, Ariba could enjoy a similar takeout bid. The one-time dot-com darling continues to make a good living supplying online tools for sourcing supplies, technology, and the like. SAP and Oracle (Nasdaq: ORCL ) are its top competitors.
Now what: What would its larger rivals pay? SAP is bagging SuccessFactors for about 7.6 times sales; Ariba trades for 6.3 times sales as of this writing. The delta could make for an interesting arbitrage opportunity -- but only if you believe an acquisition is inevitable. What's your take? Would you buy shares of Ariba at current prices? Please weigh in using the comments box below.
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