German business software giant SAP SE announced it would return Qualtrics International Inc. to public markets two years after buying the startup, WSJ reports.
Why It Matters: SAP spent $8 billion to buy Qualtrics, a customer relationship management software vendor, just before the company was about to go public in November 2018. It was one of the company’s largest acquisitions ever and was a pivotal move to compete with rivals such as Salesforce. Now, SAP is set to score a big as the public listing is expected to value Qualtrics at least 50% above its selling price.
The Key Details:
- Qualtrics is based in Provo, Utah, and chairman, former CEO and co-founder Ryan Smith just bought the Utah Jazz.
- It plans to list between $20 and $24, which would give it a fully diluted valuation between $12 and $14.4 billion.
- SAP CEO Christian Klein announced the company would remain the majority shareholder after the company goes public.
- Qualtrics has over 12,000 customers and more than 3,000 employees across more than 25 countries.
- The pandemic hasn’t spared SAP. It abandoned its relatively new dual-chief-executive structure in April to expedite decision making just six months after implementing it. In October, the company once again cut its outlook as Covid-19 cases trended up.
- Buying Qualtrics helped SAP improve its competitiveness in the cloud-computing business. With shares of other cloud services such as Snowflake and ServiceNow performing well during the pandemic, SAP is embracing the trend.
- SAP’s shares have fallen 12.5% this year.
The Takeaway: It’s been a record year for IPOs, with tech leading the way. Companies that recently went public, Snowflake and Airbnb, for example, have seen their valuation explode. Qualtrics will trade on the Nasdaq under “XM.”