SAP to float Qualtrics after $8bn acquisition
Software giant SAP is to spin off Qualtrics in an initial public offering, less than two years after buying the unit for $8bn.
Qualtrics was the last big deal signed by former SAP chief Bill McDermott, who was criticised at the time for overpaying for Qualtrics.
Just before the acquisition was announced, Qualtrics founder Ryan Smith is said to have been four days away from floating the business but SAP’s bid trumped its projected valuation.
Analysts now think Qualtrics could fetch as much as $16bn in a US listing, if it prices in line with other tech growth stocks to trade at 30 times its revenue.
SAP shares moved almost four per cent higher today following the announcement, nearing record highs.
The tech firm also published full second-quarter results today that showed it had bounced back from the impact of the coronavirus pandemic.
Non-IFRS operating profit rose seven per cent to €1.96bn, while revenue increased one per cent.
SAP restated its 2020 outlook for a rise of between one per cent and six per cent in operating profit for the full year.
Qualtrics, the smallest of SAP’s four divisions, reported a €7m profit for the quarter as revenue rose 32 per cent.
Chief executive Christian Klein called the spin-off proposal a “win-win situation” for both SAP and Qualtrics, allowing the former to gain some cash while Qualtrics earns more autonomy.
Under the proposed initial public offering, Smith would become the largest individual shareholder in Qualtrics. He and his family had previously owned 80% of the business.
SAP finance chief Luka Mucic said while details were not yet certain, it is typical for former parent tech companies to take a stake of 10 per cent to 15 per cent in transactions of this type.
Smith is set to be the largest individual shareholder in the newly floated entity. Prior to SAP’s acquisition, he and his family owned 80 per cent of the business.