Lance Winward, an engineer at Qualtrics, has a phone conference on the company’s patio in Provo, Utah, on Sept. 15, 2017.KIM RAFF/The New York Times
Canada Pension Plan Investment Board is teaming up with U.S. private equity firm Silver Lake on a proposal to buy experience management software company Qualtrics International Inc. XM-Q for US$12.4-billion in what would be one of the largest buyouts this year.
Silver Lake SVLKFand CPPIB offered US$18.15 a share for Qualtrics in a bid to take the company private, according to a securities filing. The document does not specify how much Silver Lake and CPPIB would contribute to the transaction respectively.
The controlling shareholder of Qualtrics, German software multinational SAP SE, put the company up for sale in January.
The proposal, submitted last Friday, offers a 73-per-cent premium over the average trading price of Qualtrics’s shares in the 30 days before SAP announced the sale, and a 6-per-cent premium to its closing price last Friday on the Nasdaq stock exchange. SAP also received proposals from other possible buyers and has granted Silver Lake an exclusive negotiating window until March 15.
Spokespeople for CPPIB and Silver Lake declined to comment on the transaction beyond what was included in regulatory filings.
SAP acquired Qualtrics in 2018 for US$8-billion. Three years later, it listed the company publicly in the United States, and securities filings show Silver Lake and its affiliates already own 4.1 per cent of Qualtrics’s shares, with less than 1 per cent of voting power.
Qualtrics is based in Utah and Seattle, and builds software that helps track metrics such as customer satisfaction and employee engagement.
CPPIB has $523-billion in assets that it manages for the Canada Pension Plan, the primary national retirement program for working Canadians, with about 21 million contributors and beneficiaries.
The proposal marks a potential blockbuster deal in a difficult environment for private equity buyouts. A rapid rise in interest rates has made take-private deals more expensive to finance, while a global economic slowdown and heightened geopolitical tensions threaten to put pressure on company valuations.
Silver Lake specializes in investments in technology-focused companies, with current investments that include home-rental site Airbnb Inc. and buy-now-pay-later provider Klarna. The private equity firm and CPPIB have invested together before, including in autonomous-driving company Waymo LLC and property management software provider Entrata.