Germany’s SAP, Europe’s biggest technology company, has agreed to buy Utah-headquartered Qualtrics International Inc. for $8 billion (£6.2 billion) in cash.
Qualtrics makes “XM” (experience management) software to survey customers and analyse employee sentiment; an increasingly hot market, with LinkedIn having recently snapped up rival workforce survey specialist Glint for an undisclosed sum.
The surprise acquisition comes just days before Qualtrics was due to file for an IPO.
The company had been on a roadshow with potential investors in recent weeks and had expected to raise about $495 million; valuing it at $4.8 billion.
Like Glint, Qualtrics has developed an enviable client base, including Microsoft and General Electric. It boasts 9,000 global enterprise customers, including more than 75 percent of the Fortune 100 and 99 of the top 100 US business schools.
It has been free cash flow positive since inception in 2002
It will continue to run quasi-independently with the same brand and management team, reporting under SAP’s Cloud Business Group.
Combining with Qualtrics’ “X-data” with SAP’s “O-data” (operational data) will provide a powerful new business intelligence tool, the two said.
SAP Qualtrics Combo: “A New Paradigm”
SAP CEO Bill McDermott described the combination of the two companies as representing a “new paradigm, similar to market-making shifts in personal operating systems, smart devices and social networks.”
He added in a release on Sunday: “SAP already touches 77 percent 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.”
The deal is SAP’s largest acquisition since it bought Concur Technologies Inc. for $7.2 billion in 2014 and comes as Qualtrics had planned to go public.
SAP has secured €7 billion in financing to cover the purchase.
Ryan Smith, CEO of Qualtrics, said: “Our mission is to help organizations 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.”
SAP will use its 413,000 customers and global salesforce of around 15,000 to help Qualtrics scale rapidly around the world, the company said.
We’re excited to join forces with @SAP to power the experience economy. Together, we can now deliver the transformative potential of experience data + operational data to help organizations create breakthrough experiences and results. https://t.co/yeIvL0jAEN #XM #XOdata pic.twitter.com/MLuHBqxxlG
— Qualtrics (@Qualtrics) November 11, 2018
Qualtrics expects full-year 2018 revenue to exceed US$400 million and projects a forward growth rate of greater than 40 percent, not including potential synergies of being part of SAP.
One analyst told Computer Business Review: “While the individual dynamics vary when it comes to deals like this, on a broader level there is a push by companies like SAP and IBM to bolster their competitiveness vis-á-vis the likes of Amazon Web Services and Google, and they’re doing this by buying-up smaller software firms which they hope will help them develop their solution portfolios. I don’t expect a slowdown in acquisitions like this next year…”