SAP SE Chief Executive Officer Bill McDermott opened the coffers to fund cloud computing growth by buying Concur Technologies Inc. -- and it’s come at a high cost.

SAP agreed to pay about 11 times Concur’s revenue from the past 12 months. That makes it the third-most expensive acquisition of a North American software maker valued at more than $1 billion in the past five years, according to data compiled by Bloomberg.

“SAP is paying a relatively high multiple,” said Knut Woller, an analyst at Baader Bank AG, who recommends buying SAP shares, in a note. “Acquisition-related multiples are in general relatively high for cloud-based transactions.”

The price underlines the need of Walldorf, Germany-based SAP, rival Oracle Corp. and other technology stalwarts that got their start in the 1970s to pay up for a more modern form of software delivery. McDermott, who became sole CEO in May, is trying to catch up with younger and more nimble cloud-computing providers, such as Salesforce.com Inc. and Workday Inc.

By buying Concur, SAP is seeking to play to its strength: selling new or enhanced products to its huge customer base, many of which have been running its programs for decades. The 42- year-old company’s enterprise software is used by 270,000 businesses, making SAP the market leader in applications.

Shares of SAP fell as much as 4 percent, the biggest drop in five months, and lost 3.8 percent to 57.63 euros in Frankfurt. Concur jumped 17.6 percent to $126.82 at the close in New York.

‘Getting Bolder’

Oracle, whose flamboyant co-founder Larry Ellison quit his CEO post on Sept. 18 to focus on technology, has also been snapping up companies whose software runs entirely over the Internet, saving customers the hassle and expense of keeping scads of servers updated with the latest versions and running smoothly. It has paid out for companies including Responsys Inc. and BlueKai Inc. as part of a $50 billion takeover binge for more than 100 companies over the past decade.

“SAP and Oracle appear to be getting bolder in their M&A,” Brent Thill, an analyst at UBS AG, said in a note to clients. “This deal could accelerate the pace of M&A in cloud software.”

Both companies are competing with Salesforce.com and Workday, whose sales are galloping as they deliver software solely through a cloud-computing model. Microsoft Corp. and International Business Machines Corp. have also made acquisitions to modernize their software arsenals.

Travel, Expenses

McDermott, 53, is racing to add revenue from enterprise software delivered over the Web as growth of traditional tools for managing finances and logistics stalls. Much of its own research, development and sales in the past few years have been focused on Hana, a database and analysis system SAP has used to try to pry Oracle software out of its customers’ data centers.

About 7,000 SAP customers already run Concur, which leaves lots of room for selling it to the rest of its client base, SAP spokesman Saswato Das said. SAP plans to expand sales of Concur in Europe, Asia and Latin America to supplement the product’s U.S. strength, he said.

In remarks earlier this week, SAP Chief Financial Officer Luka Mucic said company’s Internet-delivered software will outpace traditional software licenses by 2020, not counting the hefty support fees customers pay for its on-premises products.

SAP will pay $129 a share for Concur, 28 percent more than the stock’s Sept. 2 close, the day before Bloomberg reported the Bellevue, Washington-based company was exploring a sale with SAP. The price was based on a fair and accurate valuation of Concur, Das said. The purchase will be funded from a credit line of as much as 7 billion euros ($9 billion), SAP said.

Concur’s software can book flights and submit or approve expenses on the Internet or mobile devices. It’s used by corporations including Google Inc., Kellogg Co. and Hess Corp., according to its website.

“This is one of the fastest growing software-as-a-service businesses in the world,” McDermott said in an interview on Bloomberg Television. “There is no No. 2 to Concur -- they essentially own this market.”

--With assistance from Alex Sherman and Tara Lachapelle in New York.

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