SAP to Buy Qualtrics for 7 Billion Euros in its Largest-Ever Deal

SAP to Buy Qualtrics for 7 Billion Euros in its Largest-Ever Deal
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SAP is making its largest acquisition yet as it battles rivals in selling software to clients that want to better understand their customers, according to Bloomberg.

The $8 billion purchase of Qualtrics International, whose software gathers and analyzes data, is meant to strengthen SAP’s offering in the customer relations management sector. That’s a field Europe’s biggest software company wants to gain a stronger foothold in because it’s growing faster than its core enterprise software business.

Based in Utah, Qualtrics collects data on customers, brand, employees and products, such as emails, social media posts and in-app data, to give companies insights into how their customers behave or feel about them. The startup had been planning on listing on Nasdaq in a deal with a potential valuation of up to $4.5 billion.

SAP, led by CEO Bill McDermott, has secured financing of 7 billion euros to pay for the purchase, the company said. This is the German company’s largest deal to date, according to data compiled by Bloomberg, topping its 2014 acquisition of Concur Technologies for $7.2 billion.

“Tuck-ins are tuck-ins but transformative deals are transformative deals,“ McDermott said on a conference call. “You’d have to do a whole lot of tuck-ins and spend a whole lot of years tucking-things-in to do what we did here.“

Qualtrics sees sales exceeding $400 million this year and forecasts a forward growth rate of greater than 40 percent. Their planned IPO was more than 13 times oversubscribed, CEO Ryan Smith said. The company was valued at $2.5 billion in a 2017 private funding round and its customers include Microsoft, JetBlue Airways and General Electric.

Qualtrics resisted taking venture money for over a decade before finally agreeing to deals with Accel and Sequoia Capital. Ryan, who reportedly once turned down a $500 million offer for his company, his family members and other major shareholders are now poised to get about $7 billion for their shares.