German business software group SAP has agreed to buy its smaller French rival, Business Objects, for more than 4.8bn euros ($6.8bn; £3.3bn).
The price represents a 20% premium over Business Objects' Friday closing share price, and SAP said it hoped to complete the deal early next year.
Business Objects made sales of 885m euros last year, while SAP's turnover was more than 10bn euros.
Some analysts questioned the deal, and SAP's shares fell 5% in Monday trade.
'Strategy change'
"Together, SAP and Business Objects intend to offer high-value solutions for process and business-oriented professionals," the two firms said in a joint statement.
| | The move is contradictory to management's strategy to pursue organic growth...and it will put a strain on financials next year Merck Fink analyst Theo Kitz |
"Business Objects customers will continue to benefit from open, broad and integrated business intelligence solution."
Analysts said the purchase marked a change of strategy for SAP, which has previously concentrated on organic growth.
SAP aims to more than double its sales by 2010.
"The move is contradictory to management's strategy to pursue organic growth with only small fill-in acquisitions and it will put a strain on financials next year," said Merck Fink analyst Theo Kitz.
Back in August, SAP admitted accessing data from US rival Oracle.
It said the "inappropriate documents" were downloaded by its Tomorrow Now unit, but insisted it had not accessed the material.
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