SAP said it will purchase for Sybase for $5.8 billion, giving the German software giant a foothold in the database software market long dominated by archrival Oracle.
Sybase (NYSE: SY) shares rocketed up $14.57 a share, or 35 percent, to $56.14 in the regular trading session before adding another $6.96 a share, or 13 percent, to $63.10 after the bell on news of the merger.
Meanwhile, SAP shares closed off $0.47, or 1 percent, to $44.90 a share before slipping another $1, or 2 percent, to $43.90 in after-hours trading.
"With this transaction, SAP will dramatically expand its addressable market by making available its market-leading solutions to hundreds of millions of mobile users, combining the world's best business software with the world's most powerful mobile infrastructure platform," SAP Co-CEO Bill McDermott said in a statement.
"This is a game-changing transaction for SAP and Sybase customers, who will be better able to connect their employees with key functionality and information from anywhere and make it easier for companies to make faster, more informed business decisions in real time," McDermott added.
With the surprise purchase, SAP is once again breaking from its long-held tradition of relying on organic growth to bolster sales, profits and -- perhaps most important -- its stock price as it strives to keep up with Oracle (NASDAQ: ORCL) in the race for business software supremacy.
The last time SAP made such a bold acquisition was in 2007 when it shelled out $6.7 billion to purchase Business Objects.
Faced with increasing pressure from Oracle in the business applications space it once dominated, SAP in February shook up its executive board and promised sweeping changes to its product portfolio, including a greater emphasis on delivering cloud-based application suites for enterprise customers.
SAP said it will continue to support both companies' existing product portfolios and reassured developers that the firms' development organizations would remain intact and continue to collaborate with each other.
Sybase will operate as a standalone unit under the name, "Sybase, an SAP Company."
The deal is expected to close sometime during the third quarter of 2010.