SAP to Become European Corporation to Speed Up Decisions; SAP will ask shareholders to approve a change of its legal status from an Aktiengesellschaft (AG) to a Societas Europaea, or SE

March 22, 2013 Leave a comment

SAP to Become European Corporation to Speed Up Decisions

By Cornelius Rahn – Mar 22, 2013

SAP AG (SAP), the German business- management software maker, plans to turn itself into a European corporation to enable faster decision-making as it focuses on grabbing database customers from Oracle Corp. (ORCL)

SAP will ask shareholders to approve a change of its legal status from an Aktiengesellschaft to a Societas Europaea, or SE, at next year’s annual meeting, it said yesterday. One aim is to speed up decisions on the supervisory board, said a person familiar with the matter, who asked not to be named because the discussions are private.

The SE structure, already adopted by companies including BASF SE (BAS), Allianz SE (ALV) and Puma SE (PUM), was created by the European Commission to simplify regulatory and legal requirements for companies with subsidiaries in more than one European country. Previously, multinationals had to follow each of the EU members’ own legal system where they had a subsidiary.

The change could pave the way for a leaner supervisory board. While SAP has 16 people on that governing body, Allianz and BASF each has 12 members.

The change “offers the possibility to optimize both the corporate governance structure and work of the corporate bodies of SAP,” the Walldorf, Germany-based company said in a statement.

Labor Negotiations

The change is of particular interest to German companies as the SE status allows them to choose between the German two-tier system of management board and supervisory board and the single- tier system adopted elsewhere in Europe with only one board. The legal form also simplifies cross-border mergers and acquisitions.

The move also reflects the growing internationalization of SAP’s business. The German market last year made up 15 percent of SAP’s revenue, compared with 19 percent in 2009, according to data compiled by Bloomberg.

SAP’s executive board, led by co-Chief Executive Officers Bill McDermott and Jim Hagemann Snabe, will begin negotiating with European employee representatives on how to tie them into the new governance structure, SAP said.

The company, which has overtaken Siemens AG (SIE) and Volkswagen AG (VOW) to become Germany’s most valuable company, yesterday proposed to lift its 2012 dividend to 85 euro cents from 75 cents a year earlier, when SAP also announced a special dividend to commemorate its 40th anniversary. Analysts estimate that SAP’s net income will reach 3.7 billion euros ($4.8 billion) this year, more than double the 2010 figure, data compiled by Bloomberg showed.

The world’s largest enterprise software maker is betting on Web-based software, programs for mobile devices and its homegrown database Hana to help grow beyond 20 billion euros in revenue by 2015. SAP reported 2012 sales of 16.2 billion euros.

SAP shares fell 1.2 percent to 62.23 euros at 10:10 a.m. in Frankfurt, valuing the company at 76.5 billion euros.

Oracle, based in Redwood City, California, on March 20 reported profit that missed analysts’ estimates as sales from hardware and new software licenses fell.

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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