SAP acquires Qualtrics, an indicator of customer confidence, for $ 8 billion

FRANKFURT (Reuters) – The German SAP (SAPG.DE) announced Sunday that it has purchased $ 8 billion from Qualtrics International Inc., anticipating the listing of the American firm specialized in measuring consumer sentiment online.

The agreement reached, the largest of SAP since the purchase of the company for managing travel expenses and expenses Concur in 2014 for $ 8.3 billion, reinforces the expansion of general manager Bill McDermott in the management of customer relationship management (CRM) which mainly consists of helping companies manage their financial, logistical and human resources.

Qualtrics collects feedback and data about customers, employees, products and brands for 9,000 companies worldwide, providing real-time information that is vital in an increasingly digital world.

This, says McDermott, would give SAP an edge over its competitors, which he said were still based on retrospective numbers such as customer churn.

"The old players who wore their technology from the 90s into the 21st century have just demolished themselves," he told reporters during a conference call. "We have done away with the existing participants in the market."

SAP's competitors include Salesforce (CRM.N) and Oracle Corp (ORCL.N).

For Qualtrics, this agreement marks a dramatic end just days before the 16-year-old firm launched a much smaller initial public offering.

"This week we knocked on the door," said Ryan Smith, General Manager of Qualtrics, who will remain on the job. His company will retain its dual headquarters in Provo, Utah and Seattle.

When asked why he chose to team up with SAP, Smith said, "We want to create something legendary."

THE OPERATION MEETS THE EXPERIENCE

SAP sees an opportunity to combine its "operational" data (the company claims that 77% of the global transaction-generated business figure is allocated to one of its systems), with the data "d & # 39; experience "brought together by the Qualtrics XM platform.

Smith described SAP's strategy as "on the inside" and Qualtrics' on the outside.

The two leaders met a few months ago and quickly formed a friendship – McDermott said that he was introduced to lunch at Smith's home in suits and dress shoes. Both men ended up playing basketball in the yard.

"We got along fine," said McDermott, a 57-year-old New Yorker who has been leading SAP since 2010.

The SAP boss had previously stated that he was only interested in "hidden" acquisitions. He called the Qualtrics deal a transformation in terms of growth potential, comparing it to that of Facebook Inc. (FB.O) takeover of the Instagram photo sharing site.

Qualtrics expects a turnover of more than $ 400 million this year and anticipates a forecast growth rate of over 40%, not counting the potential synergies that can result from SAP's integration. Smith said the company had always been positive in terms of cash flow.

On the other hand, SAP expects total revenues to increase by 7.5 to 8.5 percent to more than 25 billion euros, although its new cloud-based products are growing at levels comparable to those of Qualtrics.

SAP recently launched a new cloud-based sales and marketing suite, called C / 4HANA, to complement its core S / 4HANA line, which is sold to 9,500 companies.

SAP will acquire all of the outstanding shares of Qualtrics and has secured financing of 7 billion euros ($ 7.9 billion) to cover the purchase price and the costs associated with the acquisition. . The transaction, which has been approved by the boards of directors of both companies, is expected to be finalized in the first half of 2019.

Qtralyst Partners and Goodwin Proctor, LLP advised Qualtrics on the transaction. JP Morgan acted as financial advisor and Jones Day as SAP's legal advisor.