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.