SAP in Talks to Sell Digital Interconnect Unit to Sinch

Liana Baker and Dinesh Nair (Bloomberg) -- SAP SE, Europe’s biggest tech company by market value, is in advanced talks to sell its digital interconnect business to Swedish mobile messaging firm Sinch AB, according to people familiar with the matter.

An agreement could be reached soon, said the people, who asked not to be identified because deliberations are private. No final decision has been made and the deal could be delayed or fall apart, the people said. Financial terms couldn’t be learned.

The German firm is working with an adviser to gauge interest in the business, people familiar with the matter said this month. The unit could fetch several hundred million dollars in a sale, they said at the time.

A representative for Sinch, which is scheduled to report earnings on Wednesday, declined to comment, as did a representative for SAP.

SAP rose 1.4% to 109.34 euros at 3:51 p.m. Tuesday in Frankfurt, giving the company a market value of 135 billion euros ($145 billion).

Sinch rose as much as 2.7% to 452 Swedish kronor in Stockholm trading, giving the company a market value of more than 26 billion kronor ($2.6 billion).

SAP’s digital interconnect business makes software that allows customers to communicate via phone or text on different carrier networks and processes related payments. The division traces its roots to a company called Mobile 365 Inc., which Sybase Inc. acquired in 2006 for more than $400 million. SAP bought Sybase in 2010.

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Sinch was founded in 2008 as a mobile messaging firm. It has grown with regular acquisitions and now employs more than 750 people in over 40 locations, according to its website. The company’s cloud platform supports messaging, voice and video.

The divestiture would be in line with SAP’s strategy to focus on growing its cloud products. The German company unexpectedly announced last week that Co-Chief Executive Officer Jennifer Morgan is leaving after the Covid-19 pandemic caused problems with its leadership structure. Morgan was appointed in October to the top executive post alongside Christian Klein.