Eighteen months after buying Utah-based management software company Qualtrics for a record $8 billion, SAP SE announced plans to take the company public.
Bloomberg News reported the German software maker will keep a majority in the business while Qualtrics Co-Founder Ryan Smith would be the biggest single shareholder, the company said.
“SAP’s acquisition of Qualtrics has been a great success and has outperformed our expectations with 2019 cloud growth in excess of 40 percent, demonstrating very strong performance in the current setup,” said SAP CEO Christian Klein in a statement. “We decided that an IPO would provide the greatest opportunity for Qualtrics to grow the experience management category, serve its customers, explore its own acquisition strategy, and continue building the best talent.”
Still, it won’t be a free ride. The company must compete with Salesforce.com and Workday Inc., the news service reported.
“We will fully participate in Qualtrics’s growth potential as majority shareholder,” Klein said in a call with analysts Monday (July 27). “We truly expect an IPO of Qualtrics will have all the ingredients to be well received by IPO investors.”
If Qualtrics goes public, an initial public offering (IPO) could bring as much as €16 billion ($18.7 billion), according to a Bloomberg Intelligence analysis, more than twice what SAP paid for its biggest acquisition.
“When you pay a premium, and you buy it for $8 billion, you want to create some synergies and create a differentiator and do some cross-selling,” Oddo BHF analyst Nicolas David told Bloomberg. “If there’s no integration, you’re buying two software products from the same supplier, and there is no value in buying those two together.”
SAP shares rose to $164.82 at the close Monday, up from $158.62 on Friday, a nearly 4 percent increase. Since January, the stock is up 22 percent.
Revenues increased by 34 percent to 168 million euros ($197 million) in the second quarter compared to the same period last year, SAP said.
Earlier this month, SAP software users were encouraged to apply a new patch to prevent hacking due to a pre-existing flaw in the software, which can be exploited remotely without the need for a username or password. As many as 40,000 SAP users could be affected. There are 2,500 vulnerable SAP systems directly exposed to the internet, and attackers who gain access to those can potentially do so to other networks.
In February, Fiserv Inc., the Wisconsin-based global provider of financial services technology, partnered with SAP to help B2B companies streamline payments and improve working capital. The partnership promises to offer B2B firms a streamlined platform to bring digital payments to their customers.
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