Silver Lake Invests $388 Million in Germany’s Software AG
(Bloomberg) -- Technology-focused private equity firm Silver Lake has agreed to invest 344 million euros ($388 million) in Germany’s Software AG.
Silver Lake is buying convertible bonds that translate into about 10% of Software AG’s currently issued share capital, the company said in a statement Monday. The transaction will help the company strengthen its position in North America and pursue acquisitions, according to the statement.
Software AG Chief Executive Officer Sanjay Brahmawar said in an interview the Darmstadt, Germany-based company is ready to accelerate its dealmaking after getting organic growth on track.
“There is no better partner than Silver Lake to do that,” Brahmawar said. “It is not about capital actually. This is so much more about the expertise, the network, the support, the relationships.”
Shares of Software AG fell as much as 12% on Tuesday. They were down 10% at 12:44 p.m. in Frankfurt, giving the company a market value of about 2.6 billion euros.
Software AG’s sales have been under pressure for almost a decade because of headwinds hampering its legacy database-management product, Adabas & Natural. Brahmawar has been changing the company’s business to a subscription-based model to lock in steady, recurring revenue streams.
Supervisory Board Chairman Karl-Heinz Streibich and fellow director Ralf Dieter have decided to step down as of Jan. 31, according to the statement. Silver Lake Managing Director Christian Lucas will join the board and is expected to be elected chairman, a rare position at a German listed company for a private equity executive, it said in the statement.
Lucas already sits on the boards of closely held technology companies including French price-comparison website Meilleurtaux and retail point-of-sale software platform Cegid. Jim Whitehurst, the former chief executive officer of Red Hat Inc., will also become a director of Software AG, according to the statement.
Silver Lake is one of the few private equity firms dedicated to technology investments, with more than $90 billion of assets under management and committed capital. Under the terms of the agreement, Silver Lake is purchasing 2% convertible subordinated unsecured notes due in early 2027 with an initial conversion price of 46.54 euros a share, a 20% premium over Software AG’s Dec. 10 closing price.
Founded in 1969, Software AG is an enterprise software developer that helps companies manage processes and data. It serves more than 10,000 businesses, and its customers include 50% of Fortune 500 companies, according to its website.
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