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AD HOC DISCLOSURE

Ad hoc disclosure according to § 15 WpHG
Software AG to acquire integration technology company Sabratec Ltd.

Mergers & Acquisition

Darmstadt, Germany, 1/7/2005

Software AG plans to acquire 100 percent of the shares of privately owned Sabratec Ltd., Tel Aviv, a vendor of integration software. A share purchase agreement has been reached with the majority of the shareholders today, following a letter of intend dated November 30, 2004 and subsequent due diligence. The Supervisory Board of Software AG agreed to the planned deal on December 8, 2004.

The purchase price of seven million US Dollars will be paid in cash after closing. In addition the former shareholders of Sabratec will receive a future revenue based earn-out over the next three years up to a total amount of four million US Dollars.   

Sabratec is the first example of Software AG’s announced acquisition strategy, which is focused on product components to enhance core competencies and to position the company as a strategic partner to existing and new customers. Software AG will assume responsibility of 16 employees, mostly software developers, who will continue to work in Tel Aviv.

Software AG’s primary interest is ApplinX, the main product developed by Sabratec. This integration software expands Software AG’s legacy modernization product portfolio. It enables the company to fully address the modernization and integration requirements of legacy users. Most important is the opportunity to win new customers in the large COBOL community. 

Sabratec currently serves approximately 200 customers worldwide including the USA, Europe, South America and Australia.  Founded in 1997 in Israel, it has distribution partners in 14 countries around the world and a subsidiary in New York. The acquisition showed growing product revenue (circa 3 million US dollars) and profit in 2004.  The Board of Software AG expects to accelerate this trend and thus the acquisition to be accretive in terms of revenue and net profit from the first year.  

Note: The  German language version is legally binding.

Software AG provides a real-time single view of strategic business information by integrating applications and systems, in addition to modernizing mainframe and open system IT environments. Its offerings are based on the product families Adabas, Natural, EntireX and Tamino. Around 2,500 employees in 59 countries support the mission-critical systems of 3,000 customers around the world. The company maintains five R&D facilities across three continents. Founded in 1969, Software AG today is Europe’s largest and most established systems software provider. It is headquartered in Darmstadt, Germany and is listed on the Frankfurt Stock Exchange (TecDAX, ISIN DE 0003304002 / SOW). In 2003 Software AG posted 420 million euros in total revenue.

Contact:
Software AG
Otmar Winzig
Senior Vice President
Investor Relations & Compliance
Uhlandstrasse 12
64297 Darmstadt
Germany
Tel: +49 (0) 6151-92-1669
Fax: +49 (0) 6151-92-34-1669
press@softwareag.com
http://www.softwareag.com
or:
Software AG
Susanne Eyrich
VP Corporate Communications
Uhlandstr.12
64297 Darmstadt
Germany
Tel: +49 6151 92-1511
Mobile: + 49 170 4522702
Fax: +49 6151 92-1621
press@softwareag.com
http://www.softwareag.com