Yahoo Finance SAP to Sell its Qualtrics Stake to Focus on Cloud Operations
SAP SE SAP recently announced that it has agreed to sell its entire stake in Qualtrics as part of the acquisition of Qualtrics by funds associated with Silver Lake and Canada Pension Plan Investment Board (CPP Investments). SAP had acquired Qualtrics in 2019.
SAP’s entire stake, which corresponds to 423 million shares of Qualtrics International, will be acquired at a price of $7.7 billion. Silver Lake and CPP Investments are acquiring Qualtrics at a purchase price of $18.15 in cash per share, (which represents a 73% premium over the 30-day average trading price prior to SAP's announcement of a potential stake sale) for a total value of $12.5 billion.
Barclays was financial advisor to SAP while Shearman & Sterling was its legal advisor for this transaction.
SAP SE Price and Consensus
SAP SE price-consensus-chart | SAP SE Quote
The stake sale transaction has been approved by the Qualtrics board, including a committee of independent directors and the SAP Executive and Supervisory Boards. The transaction, subject to customary regulatory clearances, is expected to close in the second half of 2023. SAP will be presenting Qualtrics as a discontinued operation while reporting its first quarter results.
In January 2023, the company alongside its fourth-quarter 2022 results, also announced that it was mulling to sell its stake in Qualtrics, which aligns with its strategy to streamline its portfolio and focus on its core cloud growth and profitability.
The potential sale would allow SAP to focus on its core cloud growth and profitability while allowing Qualtrics to continue its growth and leadership in the experience management category. SAP highlighted that companies and brands using Qualtrics software has risen more than 18,000 compared with 10,000 when SAP acquired Qualtrics.
SAP’s performance is being driven by continued strength in its cloud business (especially the new Rise with SAP solution) across all regions as well as momentum in SAP’s business technology platform particularly the S/4HANA solutions. In the last reported quarter, SAP’s total revenues, on a non-IFRS basis, was €8.436 billion, up 6% year over year (up 1% at constant currency or cc).
The company is also conducting a targeted restructuring program in certain areas of the company. The restructuring will affect around 2.5% of SAP's employees, with restructuring costs of €250 million to €300 million expected to be recognized in the first quarter of 2023. The program is expected to provide “moderate” cost benefits in 2023, noted SAP.
The company’s restructuring plan and Qualtrics sale is expected to better align its operating models and go-to-market approach with its accelerated cloud transformation.
Given the continued business momentum, the company provided strong outlook for 2023. SAP anticipates cloud revenues in the range of €15.3-€15.7 billion, suggesting an increase of 22-25% at cc for 2023.
SAP currently carries a Zacks Rank #2 (Buy).
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