Silver Lake acquires Software AG

American private equity firm Silver Lake has taken over Software AG in a deal that values the German business software developer at €2.2 billion ($2.42 billion).

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, according to Software AG, 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.”

Daniela Bünger, Software AG CFO, commented: “The offer of €30.00 per share represents an attractive premium for our shareholders. The commitment of the Software AG Foundation as the company’s largest investor to sell 25.1 percent is testament to the attractiveness of the cash offer. Ahead of our full financial results announcement next Thursday, I can confirm that all guidance metrics in the first quarter are in line with market expectations and reconfirm our full year guidance for 2023.”

Dr. h. c. Peter Schnell, CEO of the Foundation and co-founder and former CEO of Software AG, said: “We welcome the proposed acquisition of Software AG by Silver Lake. Silver Lake have been great partners to Software AG and to us since their initial investment, and through working together on the future of the company we have developed a deep and trusted relationship. We leave Software AG under the good stewardship of Christian Lucas, Silver Lake and the Management Board, whom we wish all the best as they embark on transforming the company over the next years. They have our full support and encouragement.”