German software company SAP announced Sunday that it will acquire Qualtrics International Inc., a Provo-based customer survey business considered one of the state’s highest profile and most successful technology firms, for $8 billion in cash.
CEO Ryan Smith will continue to lead Qualtrics, and it plans to maintain headquarters in Provo and Seattle, according to a statement from the two firms describing their agreement.
It said the boards of directors of both companies and Qualtrics' shareholders have approved the deal, expected to close in the first half of 2019.
Qualtrics, launched in 2002 in the basement of Brigham Young University marketing professor Scott Smith, Smith’s father, had been on the brink of going public. With 1,900 employees and more than 9,000 customers, Qualtrics had initially planned an offering of $200 million, updated last week to nearly $500 million, according to documents filed with the Securities and Exchange Commission.
After the acquisition, Qualtrics is expected to continue to use its own branding with existing leadership and personnel, operating within SAP's Cloud Business Group, the companies said.
SAP’s software provides businesses data about their operations, from supply chains to human resources, and says it “touches 77 percent of the world’s transactions.” Qualtrics’ experience management software gives businesses insight into “human data” by collecting information about the experiences and emotions of customers and employees.
Those reactions are fragmented, Qualtrics said in SEC filings, and “need to be collected across all engagement methods, including e-mail, SMS, chat, phone, website, and in-app links.”
SAP has more than 413,000 customers and a global sales force of about 15,000.
In Sunday’s statement, Smith said: “SAP will help us scale faster and achieve our mission on a broader stage. …. We could not be more excited to join forces with [SAP CEO Bill McDermott] and the SAP team in this once-in-a-generation opportunity to power the experience economy."
McDermott added: "The combination of Qualtrics and SAP reaffirms experience management as the groundbreaking new frontier for the technology industry.”
SAP said it secured $7 billion in financing to cover the purchase price and costs.
“This is another victory for Utah’s Silicon Slopes,” Val Hale, executive director of the Governor’s Office of Economic Development, said in a statement. “This is proof that businesses can start, grow and flourish in Utah.”
In 2012, the Smiths said they had turned down a $500 million offer for the company, choosing instead to begin accepting venture-capital funding, starting with $70 million from Accel Partners and Sequoia Capital, to help Qualtrics continue to grow. The sale is a win for those firms and later investor Insight Venture Partners, the Wall Street Journal noted.
Also in 2012, the Governor’s Office of Economic Development approved a tax rebate of $10.7 million for the company, if it created more than 1,000 jobs over the seven-year agreement. Earlier this year, Qualtrics announced Utah was the first state to adopt its customer feedback software, in a one-year, $1.4 million deal.