Private equity firm Silver Lake is in talks to buy Workday in what could become one of the largest software buyouts in history, news agency Reuters reported, citing people familiar with the matter.
The talks are still at an early stage, and there is no certainty that a transaction will be completed, according to the report.
Before news of the negotiations emerged, the California-based company had a market value of around $43 billion. Following the Reuters report, Workday shares surged nearly 18% on Thursday and closed at $206.45, lifting the company’s market capitalisation to roughly $51.1 billion.
Biggest software buyouts ever
As reports of a potential Workday acquisition by Silver Lake draws focus to the scale of the deal, here’s a look at some of the biggest software and technology buyouts announced so far:
— Microsoft and Activision Blizzard: Tech giant acquired the gaming company in a $69 billion deal in 2023. The all-cash deal saw shareholders of Activision receive a buyout of $95 per share. Following the purchase, Microsoft reported revenue from its Xbox division increased 61% by January 2024.
— Broadcom and VMware: In the same year as Microsoft’s acquisition of Activision Blizzard, Broadcom also closed its $69 billion takeover of cloud-computing firm VMware after securing regulatory approval from China, the last major market to clear the deal. The transaction faced tough regulatory scrutiny across the world and the companies had delayed the closing date three times.
— Dell and EMC: US computer giant bought data storage company EMC for $67 billion in 2016. Following the deal, EMC shareholders received $33.15 per share, $24.05 of which was in cash. The combination of Dell’s enterprise server, personal computer, and mobile businesses with EMC’s enterprise storage business was a significant vertical merger of IT giants.
— Saudi PIF and Electronic Arts: A consortium led by the Public Investment Fund (PIF) of Saudi Arabia announced in August this year that it has completed the acquisition of video games maker Electronic Arts in a $55 billion worth of deal. The transaction was also financed by Silver Lake and Affinity Partners, which is led by President Donald Trump’s son-in-law Jared Kushner.
— Oracle and Cerner: In 2022, Software maker closed its $28 billion all-cash deal to acquire health IT company Cerner. Austin-based Oracle finalised a stock tender offer at the time with 69.2% of all Cerner shares being tendered to the acquiring company. The transaction, announced in December 2021, is the software giant’s largest takeover ever and one of the largest buyouts that year.
Why the Silver Lake-Workday deal matters
The news of a potential acquisition of Workday by Silver Lake is significant not only because of its size, but also because it could signal a renewed appetite for large-scale technology and software buyouts, Reuters said in the news report.
Deal activity in the sector has remained muted in recent years due to higher interest rates, tighter financing conditions and increased regulatory scrutiny. A transaction valued at more than $50 billion would suggest that private equity firms are once again willing to pursue mega deals.