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Why Callidus Software Inc. Stock Popped Today

By Jeremy Bowman - Jan 30, 2018 at 11:50AM

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Shares of the cloud-computing company jumped on news that it would be acquired by SAP.

What happened

Shares of Callidus Software Inc. (NASDAQ: CALD) were surging higher today after SAP SE (SAP 2.18%) said it would acquire the cloud-computing company for $36 a share or a 21% premium over Callidus' 30-day weighted average share price.

As of 10:48 a.m. EST, the stock was up 10.2%, trading at $36.05. 

A man and woman stand inside a data center.

Image source: Getty Images.

So what

Callidus' board unanimously approved the deal valued at $2.4 billion. SAP, the German enterprise software provider, sees an opportunity to strengthen its position in the American cloud software market. SAP CEO Bill McDermott said, "The addition of CallidusCloud aligns perfectly to SAP's innovation strategy to transform the front office. SAP gives CallidusCloud the global scale to accelerate its already impressive growth." 

CallidusCloud CEO Leslie Stretch added, "We are super excited to join forces with SAP. This move gives customers precisely what they want, the market leading Sales Performance (SPM), Sales Execution (CPQ) and Sales Enablement clouds combined with SAP Hybris and S/4HANA."

The combination of the two companies will help SAP's clients enhance sales execution and transform customer engagement.

Now what 

With the stock trading near $36, the acquisition price, investors seem to have a high level of confidence that the deal will go through as negotiated. SAP said acquiring Callidus would not affect adjusted earnings per share this year, but would be accretive to it in 2019. The deal is expected to close in the second quarter, assuming it gets approved by Callidus shareholders and passes regulatory muster.

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