SAP to acquire market tracker Qualtrics for $8 billion

German business software company SAP has agreed to buy Qualtrics International for $8 billion in cash, pre-empting a planned stock market listing by the US-based company, which specialises in tracking market sentiment online.

The deal, SAP’s largest since it bought travel and expense-management firm Concur for $8.3 billion in 2014, will help the company strengthen its customer relationship management (CRM) software offering.
SAP SE and Qualtrics International Inc on Sunday announced the signing of a definitive agreement under which SAP will acquire Qualtrics, the global pioneer of the experience management (XM) software category that enables organisations to thrive in today’s experience economy.
Under the terms of the agreement, SAP will acquire all outstanding shares of Qualtrics for $8 billion in cash. SAP has secured financing in the amount of €7 billion to cover purchase price and acquisition-related costs. The purchase price includes unvested employee incentive compensation and cash on the balance sheet at close. 
Together, SAP and Qualtrics hope to accelerate the new XM category by combining experience data and operational data to power the experience economy, creating a highly differentiated offering for businesses.
Ryan Smith will continue to lead Qualtrics. The company will also maintain dual headquarters in Provo, Utah, and Seattle, Washington.
Subject to customary closing conditions and attainment of regulatory clearances, the acquisition is expected to close in the first half of 2019. The boards of directors of SAP and Qualtrics have approved the transaction. Qualtrics’ shareholders have also approved the transaction.
“We continually seek out transformational opportunities – today’s announcement is exactly that. Together, SAP and Qualtrics represent a new paradigm, similar to market-making shifts in personal operating systems, smart devices and social networks. SAP already touches 77 per cent of the world’s transactions. When you combine our operational data with Qualtrics’ experience data, we will accelerate the XM category with an end-to-end solution with immediate global scale. For Qualtrics, this introduces a dynamic new partner with the belief, passion and scale to bring experience management to millions of customers around the world,” SAP CEO Bill McDermott said.
“Our mission is to help organisations deliver the experiences that turn their customers into fanatics, employees into ambassadors, products into obsessions and brands into religions. Supported by a global team of over 95,000, SAP will help us scale faster and achieve our mission on a broader stage. This will put the XM Platform everywhere overnight. We could not be more excited to join forces with Bill and the SAP team in this once-in-a-generation opportunity to power the experience economy,” Ryan Smith, CEO of Qualtrics, said.
XM focuses on obtaining and tapping the value of outside-in customer, employee, product and brand feedback. Combining Qualtrics’ experience data and insights with SAP’s unparalleled operational data will enable customers to better manage supply chains, networks, employees and core processes.
Qualtrics expects full-year 2018 revenue to exceed $400 million and projects a forward growth rate of greater than 40 per cent, not including potential synergies of being part of SAP.
Following the closing of the transaction, Qualtrics is expected to maintain its leadership, personnel, branding and culture, operating as an entity within SAP’s Cloud Business Group. 
Qualtrics was advised on the transaction by Qatalyst Partners and Goodwin Procter, LLP. JP Morgan acted as financial advisor and Jones Day acted as legal advisor to SAP.