SAP Announces Intent to Spin Its $8 Billion Acquisition Qualtrics

SAP to make Qualtrics public but keep majority ownership. The experience management software company may be going public after all.


Business software group SAP said on Sunday it planned to float Qualtrics, the U.S. specialist in measuring online customer sentiment, which it acquired in late 2018 for $8 billion.

Here are the details in a nutshell:

  • Qualtrics founder Ryan Smith, current management team will continue to operate the company
  • SAP owns 100% of Qualtrics shares and will retain majority ownership; Ryan Smith intends to be Qualtrics’ largest individual shareholder
  • Final decision on IPO, conditions and timing is pending and subject to market conditions

SAP would retain a controlling stake in Qualtrics, which will remain an integral part of its “Intelligent Enterprise” strategy, SAP CEO Christian Klein said. “We are in it for the long run,” he told reporters on a conference call.

Chief Financial Officer Luka Mucic said details were still to be worked out, noting it was typical for stock market offerings of tech companies to comprise a stake of 10%-15%.

“SAP’s primary objective for the IPO is to fortify Qualtrics’ ability to capture its full market potential within Experience Management,” SAP wrote. “This will help to increase Qualtrics’ autonomy and enable it to expand its footprint both within SAP’s customer base and beyond.”

Qualtrics revenue for its latest reported quarter was €161 million, an increase of 82%.

The transaction is not expected to have an impact on SAP’s 2020 or “longer-term” financial targets given its plan to maintain majority control, SAP wrote in its filing. Qualtrics cofounder and CEO Ryan Smith is expected to be Qualtrics’ largest individual shareholder, per the document. Neither company disclosed any guidance on the timing of the planned IPO.

A final decision on the IPO and its conditions and timing is pending and subject to market conditions, SAP said.

“We believe that many SAP investors do not fully understand Qualtrics or its vision for the future and this would probably help at least as it relates to better understanding its value,” Mark Moerdler and Firoz Valliji of Bernstein Research, who have the equivalent of a buy rating on SAP stock, wrote in a note distributed to clients on Sunday.

It’s a similar scenario to the Dell Technologies-VMware model. However, the PC giant reportedly could let go of VMware altogether.

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