SAP’s New CEO Makes U-Turn on Biggest Purchase With Plan for IPO


SAP SE plans to list its Qualtrics software unit less than two years after buying the company for a record sum, a surprise about-face that signals a strategic shift under new Chief Executive Officer Christian Klein.

SAP will keep a majority in the business after the U.S. listing, which in turn will make Qualtrics co-founder Ryan Smith the biggest single shareholder, the company said late Sunday. An IPO could value Qualtrics, which measures and generates reports on customer and employee satisfaction, at as much as 16 billion euros ($18.7 billion), according to Bloomberg Intelligence analysis, more than twice what SAP agreed to pay in late 2018 in its biggest-ever acquisition.

The purchase marked the final act by former CEO Bill McDermott, who touted the deal as a way to accelerate growth by combining SAP’s sales force and a trove of operational data with Qualtrics’s customer-experience feedback. But investors blanched at the price tag at the time.

“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 said in an interview. “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 3.5% to 140.40 euros in Frankfurt trading at 10:34 a.m. The stock has gained 17% this year.

Klein must compete with younger companies, such as and Workday Inc., while managing a shrinking legacy software business. SAP will keep a majority interest in Qualtrics while giving the business greater autonomy under existing managers, the Walldorf, Germany-based company said in a statement Sunday.

“We will fully participate in Qualtrics’s growth potential as majority shareholder,” Klein said in a call on Monday. “We truly expect an IPO of Qualtrics will have all the ingredients to be well received by IPO investors.”

SAP’s New CEO Makes U-Turn on Biggest Purchase With Plan for IPO

The business’s revenue rose 34% to 168 million euros in the second quarter from a year earlier, SAP said in a statement on Monday.

The timing of the IPO will be determined later, SAP said. As majority owner, the German company plans to continue to fully consolidate Qualtrics’s results and said there will be no effect on 2020 guidance.

©2020 Bloomberg L.P.

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