SAP SE announced plans to acquire Prior Labs, an 18-month-old German artificial intelligence startup, for approximately $1.16 billion (€1 billion). The deal signals a major investment in enterprise AI capabilities and marks SAP’s largest transaction in the generative AI space to date.
The German software giant confirmed the acquisition in a statement, saying the deal is expected to close in the first quarter of 2025, subject to regulatory approvals. Prior Labs, based in Heidelberg, specializes in developing foundation models for enterprise data, including structured and tabular data formats commonly used in business software.
According to SAP, the technology from Prior Labs will be integrated into the SAP Business Technology Platform (BTP) to enhance AI-driven analytics, automation, and decision-making for its corporate customers. The startup’s models are designed to understand and process data from spreadsheets, databases, and enterprise resource planning systems without requiring extensive customization.
In tandem with the acquisition, SAP has restricted the use of third-party AI agents within its ecosystem to a curated list of approved providers. The company confirmed that Nvidia’s NemoClaw platform is now a permitted agent framework, while other agent systems from unnamed vendors will be phased out over the next 12 months.
The policy change applies to SAP’s cloud infrastructure and affects customers using SAP’s AI copilot, Joule. SAP stated that the restrictions are intended to ensure compatibility, security, and performance standards across its platform. The company did not provide a detailed list of excluded providers.
Industry analysts noted that the acquisition and the agent policy represent SAP’s effort to control the AI stack within its enterprise software market, which serves over 400,000 customers worldwide. The move mirrors similar strategies by other enterprise software providers to standardize AI tooling and reduce fragmentation.
Prior Labs was founded in April 2023 by researchers from the German Research Center for Artificial Intelligence (DFKI) and the Karlsruhe Institute of Technology. The startup raised $30 million in seed funding in early 2024 from investors including Earlybird and HV Capital. The company employs approximately 120 people, mostly engineers and data scientists.
SAP did not disclose whether Prior Labs’ leadership team will remain with the company post-acquisition. The startup’s CEO, Dr. Anna Weber, was quoted in the announcement saying the deal will “accelerate enterprise AI adoption at a global scale.”
The acquisition comes as SAP faces increasing competition from Microsoft, Oracle, and Salesforce in the enterprise AI segment. All three competitors have announced similar AI platform investments and acquisitions in the last 12 months. Microsoft invested $13 billion in OpenAI, while Oracle acquired Cerner for $28 billion with AI integration plans.
Prior Labs’ core product, a foundation model called “Tabula,” can process tables, invoices, and transaction logs with high accuracy. The model was trained on over one million anonymized enterprise datasets according to company disclosures. SAP plans to offer Tabula as a default model in its AI suite starting in the second quarter of 2025.
Customer reactions to the agent restrictions have been mixed. Some enterprise users expressed concern about vendor lock-in, while others welcomed the standardization for compliance and security reasons. SAP stated it will provide migration tools and support for customers currently using third-party agents that will be removed from the approved list.
Financial details indicate that SAP will pay $760 million upfront, with the remaining $400 million in performance-based earnouts tied to revenue targets through 2027. The deal is expected to be slightly accretive to SAP’s earnings per share by fiscal year 2026.
SAP’s share price rose 2.3% on the Frankfurt Stock Exchange following the announcement. The company reported revenue of $34 billion for fiscal year 2024, with cloud revenue growing 24% year over year.
The software group also announced plans to open a new AI research center in Heidelberg, co-located with Prior Labs’ existing facility. The center is expected to hire an additional 200 researchers over the next two years, focusing on generative AI for supply chain management and financial forecasting.
Source: Delimiter
Looking ahead, SAP management indicated that further acquisitions in the AI domain are possible as the company seeks to deepen its proprietary AI capabilities. The Prior Labs integration and the NemoClaw partnership are scheduled to be showcased at SAP’s annual Sapphire conference in June 2025.
Regulatory review by the European Commission is expected to focus on data privacy implications and market competition concerns given SAP’s dominant position in enterprise resource planning software. The commission has 25 working days to approve the deal or open a formal investigation.
