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German tech group Software AG has struck a deal to sell a key business to IBM for €2.1bn just over six months after agreeing to a takeover by US private equity firm Silver Lake.
Software AG, Germany’s second-largest software company, said on Monday that IBM would acquire a business that helps companies integrate applications and data.
The business, known as Super iPaaS, was formed just two months ago by Software AG through combining two existing divisions. At the time, the Frankfurt-listed company said the move would launch it into “a new phase of growth”.
Announcing the sale on Monday, Software AG’s chief executive Sanjay Brahmawar said that the roughly 2,000 employees working on the recently formed product platform would “have a fantastic opportunity to develop the Super iPaaS proposition with [IBM]”. The disposal was a “major validation of our strategy”, he added.
Silver Lake, one of the world’s largest tech investors, agreed a €2.6bn takeover of Software AG in May after seeing off a rival offer from US buyout group Bain Capital. London-based Schroders, a significant shareholder in Software AG, claimed that Silver Lake’s offer materially undervalued the company.
Silver Lake first backed Darmstadt-based Software AG in 2021 via a €344mn investment. California-based Silver Lake disclosed on Monday that it now owned 93 per cent of Software AG’s shares and planned to delist the group next year.
Following the sale of the part of the business to IBM, Software AG will be a significantly smaller company. It acquired StreamSets, part of the business it is selling to IBM, only last year, describing the purchase at the time as a “milestone” for the company.
The deal with IBM is expected to be completed by the second quarter of 2024. After the sale, Software AG will be made up of several businesses, including two database divisions that boast a profit margin of about 70 per cent.
Last year, Software AG made €958.2mn in sales and an operating profit of €178.5mn.