German enterprise software firm SAP over the weekend announced that it will buy US-based web-based software company SuccessFactors for $3.4 billion in cash,  in a bid to become a a global leader in the cloud-computing market.

Under the deal, which is expected to close early next year, SAP has offered $40 a share, or $3.4 billion, a 52 per cent premium to SuccessFactors' 3 December closing price.

The proposed acquisition comes six weeks after SAP's arch rival California-based Oracle, agreed to buy RightNow Technologies Inc, a maker of online customer management software, for $1.5 billion.

Oracle is buying the company at 5.5 times of RightNow's next-year's revenue, while SAP will be paying almost eight times of  SuccessFactors's 2012 revenue.

SAP has offered a good premium for the company that is expected to generate about $400 million in revenue next year.

SuccessFactors, makes software used to manage employee performance and carry out performance reviews. The San Mateo, California-based company competes with Taleo Corp and Kenexa Corp.

The SuccessFactors team is widely regarded for creating innovative technology, generating more than 80 per cent of new sales from applications that did not exist five years ago, and as one of the fastest growing leaders in cloud applications.

SuccessFactors' scalable cloud application platform supports organisations of all sizes from dozens to millions of users.

It has more than 3,500 customers, with more than 15 million subscribers in 168 countries.

''The acquisition will help us address the top priority for CEOs globally - managing people and talent,'' said Bill McDermott, Co-CEO, SAP. ''Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud.''

McDermott said that the acquisition would help the company achieve its goal of generating revenues of €20 billion in 2015.

''The depth and experience that SAP brings to customers via our cloud and on-premise portfolio fit elegantly with SuccessFactors' world-class expertise in providing high-performing, low-cost, native cloud applications that customers are passionate about,'' said Jim Hagemann Snabe, Co-CEO, SAP.

''This is a revolutionary combination of proven capabilities that will allow SuccessFactors to accelerate our roadmap by 10 years, and bring the world's leading application knowledge and intellectual property to our customers through the cloud, and the largest applications customer base instantly,'' said Lars Dalgaard, Founder and CEO, SuccessFactors.

SuccessFactors will remain an independently run unit in the group. Dalgaard will join SAP's executive board and head its cloud business.