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SAP is planning to partially spinoff Qualtrics in an IPO

SAP is planning to partially spinoff Qualtrics in an IPO

Qualtrics, which was acquired two years ago by SAP for $8 billion, will be spun off in an Initial Public Offering. When announcing the spinoff on July 26, SAP said that the objective of the IPO is to help Qualtrics gain market potential in the experience management niche.

It is a move that will increase Qualtrics’ independence and help it spread both within and beyond SAP’s customer base. The move may come as a surprise, given that SAP acquired Qualtrics to expand its cloud business.

The aim was also to manage supply chains, core processes, employees, and networks. However, SAP intends to maintain a majority stake after the IPO.

The story from SAP

The official story from SAP is that the IPO is a way to increase Qualtrics’ potential, but there could be something they’re not making known. It could be something simple like shifting priorities, in May they already sold their Digital Interconnect communications division to Sinch AB for a quarter of a billion dollars.

With a precedent like that, it could be that SAP is shedding off some divisions and companies under their umbrella.

After the IPO, Qualtrics’s founder Ryan Smith will stay on with the company while remaining the largest individual shareholder. SAP will stay the majority shareholder..

Status-quo will be maintained

In their statement, SAP says the transaction is not expected to change much in terms of the long-term financial goals and other 2020 plans.

Unexpected as this might be, the Qualtrics float will most likely be significant with the potential to be valued at more than $10 billion probably. Since acquiring Qualtrics, SAP has continued its growth and had plans to go public even back then. It was SAP who convinced Qualtrics not to go public but sell the company to them. That is why an IPO under the wing of SAP comes as such a surprise