Germany’s SAP has agreed to buy U.S. expenses software maker Concur for $7.3 billion in cash, strengthening its position in cloud computing, an area it long hoped to avoid until its momentum became too great to ignore.

SAP specializes in providing software for companies on their computing networks, but has come under pressure from cheaper rivals that offer services over the internet, or “the cloud.”

By buying Concur, SAP is not only increasing its online products, but also believes it can capitalize on the U.S. firm’s strength in the travel sector to sell additional software.

The German business software company said it would offer $129 per share for Concur, a 20 percent premium over the Sept. 17 closing price and just short of the $130.36 record high Concur shares set in January after a two-year upward run.

That is equal to the 20 percent premium SAP paid for its 2012 acquisition of cloud procurement software maker Ariba, and comparable with the 18 and 19 percent arch-rival Oracle paid for Taleo in 2012 and RightNow in 2011.

“It seems expensive. But we believe that Concur is the leader in its market and the potential synergies will be a valuable addition,” Bernstein analysts wrote in a note.

SAP, which competes in cloud computing with global rivals including Oracle, IBM and Salesforce, will finance the Concur acquisition through a credit facility agreement of up to 7 billion euros ($9 billion).

After initially shunning the cloud, SAP began a series of acquisitions with the $3.4 billion purchase of SuccessFactors in 2011 as it responded to fast-growing internet software pioneers such as Salesforce and Workday.

‘Something Big’

With the acquisition of Concur, SAP will increase its cloud users to 50 million from 38 million.

“We have something big here, guys,” SAP Chief Executive Bill McDermott told analysts and reporters on a conference call.

Concur has 23,000 clients, including companies, governments and universities with a total of more than 25 million users of its travel and expense-management software.

About a third of Concur users run SAP software and the German company expects to add Concur customers.

Based on 57 million outstanding shares, the offer for Concur is valued at $7.3 billion. Including debt, the offer represents an enterprise value of about $8.3 billion, SAP said.

Global business spending on cloud services is expected to jump 20 percent this year to $174 billion, research firm IHS estimates, rising to more than $235 billion by 2017.

Concur has close relationships with providers of travel services, giving the potential to capture repeat business from hotel or airline partners that will add to SAP’s revenues without it having to find extra users.

The model could allow SAP to build a tight-knit business travel community in the cloud without risking its double-digit margins, analysts said.

As well as Ariba, SAP also owns Fieldglass, which allows companies to manage their temporary staff and independent contractors and services.

Sales Boost

SAP expects to gain between 3 billion euros and 3.5 billion euros in sales from cloud computing by 2017, out of a total of at least 22 billion, but CEO McDermott said it would raise that forecast after completion of the Concur acquisition.

SAP shares closed down 2.4 percent at 58.45, the biggest drop in a 0.6 percent weaker European technology index.

Shares in Concur, which reported a 28.6 percent rise in revenue to $178.37 million in the quarter to June 30, were up 18 percent by 1637 GMT. They have fallen more than 17 percent since early this year. The drop has been partly down to declining margins, Jefferies’ analysts wrote in late April.

Concur trades at 44 times expected earnings before interest, tax, depreciation and amortization (EBITDA), according to Starmine data, against a ratio of 30 for

The Concur board of directors has unanimously approved the transaction, which is expected to close before the end of the first quarter of next year, subject to shareholder and regulatory approvals.

SAP was advised by Deutsche Bank. Concur was advised by boutique bank Qatalyst.

(1 US dollar = 0.7768 euro)

(Additional reporting by Eric Auchard and Georgina Prodhan; Editing by David Goodman and Mark Potter)