A chancery court has dismissed the suit brought forward by two Qualtrics stockholders accusing the company of favoring a conflicted offer for the $12.5 billion sale of the company in March of last year.
The class case alleged that Qualtrics and SAP – which owned a 71 percent stake in Qualtrics at the time – accepted an $18.15 per-share bid from Silver Lake and the Canada Pension Plan Investment Board, despite having also received a $21 offer from Thoma Bravo.
Counsel for the plaintiffs claimed that the agreed deal benefitted SAP rather than the stockholders, arguing that the company chose to sell to an ally in Silver Lake rather than a rival in Thoma Bravo, costing investors and stockholders money in the process.
Indeed, CX vendors within Thoma Bravo’s portfolio include Calabrio, Qlik, and – most interestingly – Qualtrics’s closest competitor, Medallia.
They also stated that the terms of the deal – which included the continuation of intercompany agreements between SAP and Qualtrics – were “generally favorable to SAP.”
However, Vice Chancellor J. Travis Laster ruled in Qualtrics and SAP’s favor, claiming that the plaintiffs were unable to prove any tangible benefit for SAP in selling to Silver Lake rather than Thoma Bravo.
This is a situation where the plaintiff needs to come up with something more. What’s required is some form of incremental benefit over the status quo that the controller would receive.
“The plaintiff says the new agreement must mean that they conferred some benefit on SAP. I don’t think that’s what the law says.”
Laster also questioned the accuracy of the $21 offer from Thoma Bravo, suggesting that the two deals were at completely different stages, with the $18.50 price being locked in, whereas the $21 was more open to fluctuation after deeper scrutiny.
“In terms of Thoma Bravo’s response, there was never an offer of [buyer] contractual provisions. They didn’t get to the point of hiring an economic consultant to look at those types of things.
First, $21 was an initial indication of interest from a private equity buyer. That makes it somewhat of a questionable number. That number often goes down as due diligence continues.
The Deal in Question
In March of last year, it was announced that Silver Lake and CPP Investments had acquired Qualtrics for $12.5BN.
The deal included the sale of SAP’s remaining 71 percent stake in Qualtrics, which it purchased for $8 billion in 2018.
Having spun Qualtrics into an IPO, SAP saw a significant rise in the company’s market value as well as its customer base growing from 10,000 to 18,000
However, in spite of this, SAP had been gradually reducing its percentage since the acquisition and, following the post-pandemic tech market downturn, decided to sell its remaining stake.
In discussing the deal at the time, Zig Serafin, CEO of Qualtrics, commented:
We are incredibly excited to partner with the team at Silver Lake, who deeply understand our business and will help us continue to build a high-performing company, invest in our innovation and expand our ecosystem to help our customers succeed.
More News from Qualtrics
Since the acquisition, Qualtrics has returned to being a private company and has garnered some success.
Most notably, it was named a leading voice of the customer solution in the 2024 Gartner Magic Quadrant, where it was commended for its investment in generative AI (GenAI) and its standout CX, analysis, and insight capabilities.
Elsewhere, during its annual X4 event in May, Qualtrics introduced the following three new apps for its XM Platform:
- Qualtrics Frontline Locations
- Qualtrics Frontline Digital
- Qualtrics Frontline Care
These apps are designed to help frontline staff quickly and effectively build personalized customer connections across in-store, online, and contact center environments.
The apps also promise to enhance CX at scale by leveraging Qualtrics AI, which is informed by the world’s largest database of human sentiment.
