(Bloomberg) SAP SE creates its greatest asset when it comes to competing against competitors, including Salesforce.com Inc. when selling software to customers who want to better understand their customers.
The purchase of Qualtrics International Inc., a $ 8 billion software program that collects and analyzes data, is expected to strengthen the SAP offer in the customer relationship management sector. This field is the largest European software company that wants to gain stronger support because it grows faster than its basic business software firm.
Utah-based Qualtrics collects customer, trademark, employee, and product data such as emails, social media posts, and in-app information that give businesses insight into how their users behave or feel about them . The launch was the planning of the listing on Nasdaq in agreement with a possible valuation of up to 4.5 billion dollars.
On Monday, SAP fell by 4.7% at the beginning of Frankfurt, as analysts doubted the price of the deal. This is a costly plan to buy growth, said Neil Campling, an analyst at Mirabaud. The bid price, approximately 20 times the Qualtrics sales this year, is "extremely high multiple, no matter how you watch it," he said in email comments.
SAP, run by CEO Bill McDermott, has provided funding of 7 billion euros ($ 7.9 billion) to pay for the purchase, the company said on Sunday. This is Germany's largest business to date, according to data provided by Bloomberg, which was acquired by Concur Technologies Inc. in 2014. for $ 7.2 billion.
"Tuck-ins are excited, but transformation arrangements are transforming business," said McDermott at a conference call. "We should make a lot of bubbles and spend even many years who are struggling to do what we have done here."
SurveyMonkey, a direct competitor, rose by as much as 67% in September after gaining $ 180 million in initial launch on the internet in its initial public offering, which was higher than the target. However, the deal was initially estimated below $ 2 billion in the private round for 2014.
This year, the company estimates that sales are more than $ 400 million and predicts a growth rate of more than 40%. Their planned IPO was more than 13 times higher, said director Ryan Smith. The company was worth 2.5 billion dollars in the private round of 2017, with its customers including Microsoft Corp., JetBlue Airways Corp. in General Electric Co.
Customers do not need extensive professional coding to use Qualtrics tools and can use features such as automated analysis of sentimental responses to open text. Saks Fifth Avenue Inc. uses Qualtrics to create questionnaires for feedback on their brand names; Whole Foods Market Inc. it uses it to collect and analyze the qualifications of its employees.
"SAP introduces a greater momentum in CRM, which grows at 20% and becomes one of the largest software markets in the world," said Holger Schmidt, an analyst at Bankhaus Metzler. "It's about collecting more information about products, customers, and supply chains."
SAP assumes that the transaction will close in the first half of 2019 and that Qualtrics will act as a subject within the SAP Cloud Business Group. Ryan Smith, director of Qualtrics, will continue to run a company that will maintain a double seat in Provoo, Utah and Seattle.
For over a decade, Qualtrics has responded to the takeover of risky money before finally agreeing to deal with Accel and Sequoia Capital. Ryan, who reportedly once rejected a $ 500 million bid for his company, his family members and other major shareholders are now ready to acquire about $ 7 billion for their shares.
"We want to work with SAP, and that's what we are most enthusiastic about," Smith said.
On the transaction, Qatalyst Partners and Goodwin Procter, LLP, advised Qualtrics. JPMorgan Chase & Co was a financial advisor and Jones Day acted as a legal adviser to SAP.
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