Is $12.4 billion a fair price for Qualtrics?

When the news hit Monday that Qualtrics was in the process of being acquired, it wasn’t really surprising. SAP has never seemed enamored with the company despite spending a hefty $8 billion to buy it in 2018. It took the German software giant just two years before it decided to rebrand Qualtrics as a separate company. . After years of waiting for this to happen, Qualtrics finally went public in 2021.

While Qualtrics operated as a separate company with its own board, budget and ability to set its own direction, SAP was still the power behind the throne, controlling 71% of its shares.

SAP has always seemed to have buyer’s remorse when it comes to Qualtrics. He hoped to get a dose of cloud know-how and access to crucial customer data, two things Qualtrics readily provided, but the two companies never seemed to quite match. Acquired while Bill McDermott was still CEO of SAP, his replacement, Christian Klein, may not have felt the same affinity for the company.

Whatever the reasons, the company started buying Qualtrics in late January. This decision contributed to increase the value of the controlled company. The best offer it received for Qualtrics was around $12 billion from a set of buyers including Silverlake and the Canadian Pension Board. Taking into account SAP’s 71% stake, his reduction in that figure amounts to about $8.8 billion, essentially the price at which he bought the company in 2018 and not much more.

Qualtrics filed a Form 8-K with the SEC over the weekend, outlining the terms of the deal, including that Silverlake and its investment partners offered $18.15 per share. That figure represents just a 6% premium to Friday’s closing price, according to the Financial Times. (Note, however, that Qualtrics has already seen some appreciation after news of its potential sale broke earlier in the year; a sale was already priced in.)

It’s also worth noting that this isn’t a done deal, although it seems unlikely that anyone will beat the number on the table. Anyway, we wanted to take a look at this price and determine if it was fair? Is it as low as it seems at first glance? Let’s dig into the numbers and find out.

Fair or unfair

To answer our question about Qualtrics’ potential sale price and whether it’s being sold at a low price, we’ll have to question its pre-announcement and post-announcement value. While the premium to Friday’s close was not significant, it starts to improve if we extend our time horizon.