The monster Utah IPO that was the talk of the tech industry and all over the local press earlier this month is off.
When Provo-based Qualtrics’ CEO Ryan Smith announced his intentions to take his company public, the initial stock offering was universally expected to eclipse all others for a Utah-based company. But that won’t happen because Smith has accepted an $8 billion offer from SAP, a German multinational software corporation, to buy the company. The new deal is being hailed as one of the biggest ever for a venture-backed enterprise software company.
Qualtrics is a pioneer in the experience management (XM) software category and helps companies with data and feedback in the areas of customer, employee, product and brand management. Industry insiders have dubbed Qualtics a “unicorn” company because of its unique products and operation. The company employs about 1,900.
“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,” Smith said in a statement. “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 (Qualtrics-developed) XM Platform everywhere overnight.”
SAP is a multinational software corporation that makes enterprise software to manage business operations and customer relations. SAP is headquartered in Walldorf, Baden-Württemberg, Germany, with regional offices in 180 countries. The company has over 335,000 customers and almost 100,000 employees.
Qualtrics is expected to operate as an entity within SAP’s Cloud Business Group following the deal, retaining its brand and joint headquarters in Provo and Seattle. Smith will continue to lead the company, according to a joint release.
Under the terms of the agreement, SAP will acquire all outstanding shares of Qualtrics for $8 billion in cash. SAP said it has secured financing in the amount of 7 billion euros to cover the purchase price and acquisition-related costs. The purchase price includes unvested employee incentive compensation and cash on the balance sheet at close. 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 both companies have approved the transaction. Qualtrics’ shareholders have also approved the transaction.
We continually seek out transformational opportunities — today’s announcement is exactly that,” said SAP CEO Bill McDermott. “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 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. 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.”
“The combination of Qualtrics and SAP reaffirms experience management as the groundbreaking new frontier for the technology industry. SAP and Qualtrics are seizing this opportunity as like-minded innovators, united in mission, strategy and culture,” McDermott continued. “We share the belief that every human voice holds value, every experience matters and that the best-run businesses can make the world run better. We can’t wait to stand beside Ryan and his amazing colleagues for the next chapters in the experience management story. The best for Qualtrics and SAP is yet to come!”