Software AG Draws Interest From CVC, Silver Lake, Thoma Bravo

(Bloomberg) -- CVC Capital Partners, Silver Lake Management and Thoma Bravo are among the private equity firms weighing bids for Germany’s Software AG, according to people familiar with the matter.

Several buyout groups have submitted letters of interest for the software company, which has a market value of 3 billion euros ($3.3 billion), the people said, asking not to be identified discussing confidential information.

Deliberations are in the early stages and there’s no certainty any of the firms will decide to proceed with approaches or formal offers, according to the people. Software AG is likely to interest other private equity firms, the people said. 

Representatives for CVC, Silver Lake and Thoma Bravo declined to comment.

Darmstadt, Germany-based Software AG is working with advisers to gauge interest from potential buyers, Bloomberg News reported last month. Any deal would likely require the support of the Software AG Foundation, which holds more than 30% of the company. The charitable foundation was created by founder Peter Schnell in the 1990s.

The deliberations come in one of the busiest-ever years of dealmaking for Germany’s listed companies that’s already seen the likes of online pet-supplies group Zooplus AG, real estate firm Alstria Office REIT-AG, and infrastructure-tech provider Schaltbau Holding AG draw private equity bids and takeovers. 

Founded in 1969, Software AG is an enterprise software developer that serves more than 10,000 businesses with products used in everything from process to data management. Its customers include 50% of Fortune 500 companies, according to its website. 

Such businesses have proved to be popular with private equity firms, especially technology specialists like Silver Lake and Thoma Bravo, which are drawn to the stable revenue streams their subscription models can generate. Thoma Bravo and EQT AB are exploring potential bids for banking-software specialist Temenos AG, people familiar with the matter said previously, in what could be the largest takeover of a Swiss company since 2017.

Software AG posted revenue of 599 million euros in the first nine months of the year, broadly flat on the same period in 2020, accounts for the period show. Sales at the company have been under pressure for almost a decade because of secular headwinds hampering its legacy database-management product, Adabas & Natural, Bloomberg Intelligence analyst Tamlin Bason wrote in a note last month. 

“Software AG’s path to sustainable top-line growth in the midterm relies on its digital business segment compensating for attrition from the A&N segment,” Bason wrote.

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