In a landmark deal, SAP, the renowned German enterprise software giant, has acquired Israeli software company WalkMe for $1.5 billion. The deal values WalkMe’s shares at $14, representing a 45% premium over its last closing price on Nasdaq. This announcement has led to a surge in WalkMe’s stock, with a pre-market trading increase of over 40%.

However, this acquisition price is notably lower than WalkMe’s IPO price during its peak in 2021, where shares were valued at $31, giving the company a valuation of $2.6 billion. As of the end of the first quarter, WalkMe held approximately $340 million in cash reserves and anticipates revenues of $279-283 million for the current year.

WalkMe specializes in developing software that simplifies the use of complex corporate systems, thus enhancing productivity and mitigating risks for businesses. The company was founded by CEO Dan Adika, Raphael Sviri, Yuval Shalom Ozana, and Eyal Cohen. Its major shareholders include several venture capital funds, with Insight Partners holding the largest share at 26.4%, valued at $354 million. Adika himself holds 3.8% of the shares, which are worth $50.6 million in the deal.

At the end of the previous year, WalkMe employed around 1,000 staff, with over 400 based in Israel. The company had undertaken two rounds of layoffs in 2022 and 2023 to focus on profitability. WalkMe’s client base includes major corporations such as Nestlé, Siemens, and LinkedIn.

SAP, with a market value of €209 billion, is a global leader in enterprise software and operates a significant development center in Israel, employing about 900 people in Ra’anana and Tel Aviv. This center focuses on cloud platform development, user identity management, privacy, and user experience. SAP’s presence in Israel has grown through the acquisition of 11 start-ups over the years, including Gigya for approximately $350 million in 2017 and Top Tier for $400 million.

The acquisition of WalkMe represents SAP’s largest purchase in Israel to date. SAP CEO Christian Klein emphasized that integrating WalkMe’s solutions will enhance SAP’s offerings, enabling customers to better transform their businesses. He highlighted the importance of applications, processes, data, and people in successful business transformation, noting that WalkMe’s capabilities will help SAP users quickly adopt new features and maximize their IT investments.

Dan Adika, CEO of WalkMe, expressed enthusiasm about the acquisition, calling it a significant milestone. He believes that joining forces with SAP will provide the resources and customer base necessary to expand WalkMe’s product offerings and market reach. Leveraging SAP’s extensive ecosystem will open up significant growth opportunities and allow WalkMe to generate even more value for its customers.

Image credit: SAP, Walldorf, Germany. Thomson Reuters