Software AG Enters into Investment Agreement with Silver Lake to Support Long-Term Growth
April 21, 2023 -- Software AG has signed an investment agreement with Blitz 22-449 SE, a holding company controlled by funds managed or advised by Silver Lake Technology Management, L.L.C., to deepen its existing strategic partnership with Silver Lake and support the long-term growth and strategic objectives of the Company. In this context, Blitz 22-449 SE has announced its intention to launch a voluntary public tender Offer at an Offer price of €30.00 per share in cash for all outstanding shares of Software AG. The Software AG Foundation is fully supportive of the Offer and has signed a purchase agreement to sell 25.1 percent of all shares to Silver Lake.
The Offer Price would represent an attractive premium of 53 percent to the XETRA closing price of Software AG shares on 20 April 2023. It would also offer a substantial premium of 48 percent to the three-month volume-weighted average share price. It would imply an equity value of Software AG of approximately €2.2 billion.
The Company’s Management Board and the Takeover Committee on behalf of the Supervisory Board welcome the deepened strategic partnership with Silver Lake and have therefore resolved to support the Offer. Subject to the careful review of the Offer document, the Management Board and the Takeover Committee on behalf of the Supervisory Board of Software AG intend to recommend acceptance of the Offer in their reasoned statement.
The Offer is subject to an acceptance threshold of 50 percent plus one share and further customary conditions, including regulatory clearances. The transaction is fully funded with equity and debt financing in place.
Foundation to Sell 25.1 percent of All Outstanding Shares
The Software AG Foundation, the Company’s largest investor, is in full support of the Offer and has signed a share purchase agreement with the Investor to sell 25.1 percent of all shares. This underlines the attractiveness of the cash Offer to current shareholders, who have the opportunity to realize a substantial part of the planned multi-year and investment-heavy value creation journey upfront. The Software AG Foundation will continue to own 5 percent of shares. The retained 5 percent of shares are subject to a lock-up.
Software AG and Silver Lake first signed a partnership in 2021, when Silver Lake supported the Company with an investment of €344 million to drive Software AG’s Helix transformation, with Silver Lake representatives Christian Lucas and James Whitehurst joining Software AG’s Supervisory Board. Silver Lake has strongly supported the Company’s strategic vision in focusing on the cloud application and data integration market, transitioning to a SaaS-first business and in exploring M&A opportunities. Silver Lake's proven expertise in all three of these areas in particular has accelerated the Company’s strategic transformation progress and positions it as the ideal partner for the next phase of Software AG’s multi-year transformation amidst a challenging macroeconomic environment and considering the required operational and financial long-term investments.
Sanjay Brahmawar, Software AG CEO, commented: “The Management Board welcomes the opportunity of a deepened strategic partnership with Silver Lake, following a thorough analysis of the Offer. Silver Lake has already demonstrated strong support for our strategic vision and values. With deep expertise in the integration market, experience in transitioning businesses to SaaS-first models and extensive M&A capabilities, Silver Lake is a valuable long-term partner for Software AG and our customers. A successful transaction would enable us to accelerate the execution of our strategy, double down on innovation in integration for customers, and provide greater opportunities to attract and develop talent. We would like to thank the Foundation and Dr Schnell for the many years of support in contributing to where Software AG is today.”
Q1 Trading Update Confirms Market Expectations and Full Year Guidance
The Group confirms that it will announce full financial results for the first quarter of 2023 on Thursday, April 27, 2023, as previously disclosed. All guidance metrics in the first quarter are in line with market expectations and Software AG reconfirms its full year guidance for 2023 across all metrics.
Software AG remains committed to double-digit revenue growth in the Digital Business segment and reiterates its ambition to reach an operating profit margin in the high twenties in the medium term which will translate into improved cash flow generation.
Software AG’s Q1 performance and medium term ambitions follow the Company’s strategic transformation under Helix over the last four years. Software AG’s strategic vision is centered on the cloud application and data integration market, transitioning to a SaaS-first business and in exploring M&A opportunities. In considering the Offer, the Management Board reviewed investment into product and go-to-market strategy, as well as the broader market environment for digital transformation.
In light of Silver Lake’s role on the Supervisory Board, Christian Lucas and James Whitehurst have recused themselves from the process and an independent Takeover Committee consisting of Madlen Ehrlich, Oliver Collmann and Ursula Soritsch-Renier has been created.
PJT Partners is acting as financial advisor and Clifford Chance is acting as legal advisor to Software AG. Gleiss Lutz is acting as legal advisor to the Supervisory Board.
About Software AG
Software AG simplifies the connected world. Founded in 1969, it helps deliver the experiences that employees, partners and customers now expect. Its technology creates the digital backbone that integrates applications, devices, data and clouds; empowers streamlined processes; and connects “things” like sensors, devices and machines. It helps 10,000+ organizations to become a truly connected enterprise and make smarter decisions, faster. The Company has about 5,000 employees across more than 70 countries and annual Group revenue of more than €950 million.
Source: Software AG
