Silver Lake and the Canadian pension fund bid $12 billion for Qualtrics

US private equity group Silver Lake and Canada’s largest pension fund have offered $12.4 billion to buy Experience Management software company Qualtrics in what would become one of the biggest acquisitions of the year.

The potential transaction comes as SAP, the majority owner of Qualtrics, seeks to divest a 71 percent stake as part of the German software giant’s restructuring.

SAP acquired Qualtrics, a provider of software tools companies use to survey customers and employees, for $8 billion in 2018 and took it public in the US three years later.

Silver Lake, which owns a 4.1 percent stake in Qualtrics, expressed interest in privatizing the Utah-based software company last month after SAP informed shareholders of its plan to sell its stake.

Silver Lake and the Canada Pension Plan Investment Board, its partner in the proposed acquisition, are offering to pay Qualtrics $18.15 per share in cash, or a 6 percent premium to Friday’s closing price. The price represents a 73 percent premium to Qualtrics’ trading value before SAP notified shareholders of its intention to sell its stake.

Silver Lake and CPPIB have until March 15 to hold exclusive acquisition negotiations with SAP and Qualtrics. If completed, the transaction would be the largest private equity buyout of the year. Rising interest rates have made it more difficult to finance acquisitions, and concerns about the health of the global economy have led some investors to fear that valuations in public markets could fall.

Two other unnamed bidders have also made acquisition proposals to Qualtrics, the company said in a securities filing on Monday, signaling that the takeover efforts may attract new bids.

Silver Lake has been associated with Qualtrics since its relisting on the Nasdaq exchange in early 2021. Egon Durban, Silver Lake’s co-CEO, has served as a director on Qualtrics’ board since the completion of the spin-off from SAP.

In 2021, Silver Lake led an investment in a property management software company alongside Ryan Smith, the billionaire founder of Qualtrics who is also CEO and a large minority shareholder.

Although rising interest rates make it difficult for private equity investors to fund acquisitions, software companies are the exception. Specialized buyout groups such as Thoma Bravo and Vista Equity Partners have in recent months turned to private lenders and large equity investors such as sovereign wealth funds to put together financing packages for large takeovers of software companies.

Silver Lake is one of the largest buyout groups in the world with assets of $92 billion and a focus on investing in technology-enabled companies. It is also the second largest shareholder in City Football Group, the owner of Manchester City controlled by Abu Dhabi royal billionaire Sheikh Mansour bin Zayed Al Nahyan.

The Menlo Park-based investment group is best known for its partnership with PC billionaire Michael Dell in the $24 billion acquisition of his namesake PC company in 2013, and three years later acquired EMC Corporation.

Dell and Silver Lake are in the process of divesting a large part of that deal, selling VMware to Broadcom for $69 billion, which could set the duo back up to $15 billion in cash if approved by global antitrust authorities becomes.