UPDATE: Goldman Sachs Downgrades Ariba to Neutral Post Acquisition Announcement by SAP

Goldman Sachs reduces its rating on Ariba

from Buy to Neutral, but raises its price target from $42 to $44 to increase the weighing of the M&A component in share valuation. Goldman Sachs notes, "This afternoon, SAP announced that it has signed a definitive agreement to acquire Ariba, Inc. for $45 per share, a 20% premium to yesterday's close. The purchase price represents a value of $4.3 bn. SAP expects the deal to close in 3Q12. In light of the announcement and today's stock move, +19%, we are downgrading Ariba (ARBA) to Neutral from Buy. We are also removing the stock from the Americas Conviction. Since being added to the Conviction and Buy Lists on 2/26/12, shares of ARBA are +46% vs. the Russell 3000 -4%." ARBA closed at $44.87 on Tuesday.