German enterprise software company SAP (SAP) has agreed to acquire a majority stake in Taulia, a California-based fintech startup that provides working capital management solutions. SAP stock fell 7.48% on Thursday.
Taulia has built a platform that allows suppliers to receive early payment for the products they deliver to customers. To do this, it partners with banks to provide the funding. It has built a broad network of high-profile bank partners, including J.P. Morgan (JPM), which also has a stake in the business.
SAP notes that the COVID-19 pandemic has caused disruptions to supply chains, resulting in liquidity challenges that have led to increased demand for early payment. Citing Taulia’s leading technology and strong financial partner network, SAP explains that its move to take a majority stake in the fintech company is aimed at improving access to liquidity and cash flow for companies.
Taulia has been a SAP partner for some time, and its solutions are integrated into some SAP offerings. As a result, they have common customers, notably AstraZeneca (AZN), Airbus (EADSY), and Nissan (NSANY). The deal is expected to allow SAP to strengthen the integration with Taulia.
SAP CFO Luka Mucic commented: “By combining the deep working capital management expertise of Taulia with SAP’s broad CFO solution portfolio…we will offer these capabilities at scale to help businesses improve their financial position and seize growth opportunities.”
In addition, J.P. Morgan and SAP will take a majority stake in Taulia. The startup’s other investors are Matrix Partners, Trinity Ventures, and Zouk Capital.
Although Taulia will become a part of the SAP Group, SAP plans to keep Taulia as an independent company operating under its own brand, and current CEO Cédric Bru will continue in his role. Former SAP CEO Léo Apotheker already sits on Taulia’s board and has a stake in the startup. SAP plans to make its CFO Luka Mucic chairman of Taulia’s board.
Oppenheimer analyst Brian Schwartz recently reiterated a Hold rating on SAP stock without assigning it a price target.
Consensus among analysts is a Moderate Buy based on 2 Buys and 2 Holds. The average SAP AG price target of $162.50 implies 32.78% upside potential to current levels.
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