Enterprise software SAP announced on Wednesday its acquisition of digital adoption platform provider WalkMe for $1.5 billion in cash. The deal, valued at $14 per share, represents a 45% premium over WalkMe’s closing price of $9.64 on Tuesday, reflecting the strategic importance of the acquisition for SAP’s future endeavors.
WalkMe, founded in Israel in 2011, has evolved significantly from its initial focus on simplifying website navigation through real-time, on-screen guidance. Relocating its headquarters to San Francisco, the company expanded its platform to offer robust features aimed at both consumer and enterprise applications.
Its innovative approach, featuring balloon overlays and on-screen prompts, was designed to automate user guidance, reducing the need for human intervention in onboarding and feature adoption processes.
As WalkMe shifted its focus to enterprise solutions, it began offering valuable insights into end-user behavior, providing targeted support tools at critical junctures where users might abandon applications.
This emphasis on automating in-app support aligns seamlessly with SAP’s objective of enhancing the user experience for its enterprise customers.
Despite raising approximately $300 million prior to its 2021 IPO, WalkMe faced a steep decline in valuation during the pandemic, dropping from a peak of $2.8 billion in September 2021 to just over $600 million within a year.
The company’s market capitalization has stabilized around $800 to $900 million in 2023, bolstered by a 25% surge in share prices following strong earnings last month.
WalkMe reported a 4% increase in first-quarter revenue year-over-year and introduced WalkMeX, an AI-powered copilot leveraging contextual awareness to suggest optimal next steps for workflows.
SAP plans to integrate WalkMeX with its own AI copilot, Joule, launched in September.
SAP, which has seen its valuation soar to an all-time high of $230 billion this year, views the WalkMe acquisition as complementary to its recent purchases.
In 2021, SAP acquired Signavio, a business process automation company, for $1.2 billion. Last year, it bought LeanIX, specializing in enterprise architecture management, underscoring SAP’s commitment to modernizing businesses through integrated solutions.
“Applications, processes, data, and people are the four key elements of a successful business transformation,” SAP CEO Christian Klein stated in a press release. “By acquiring WalkMe, we are doubling down on the support we provide our end users, helping them to quickly adopt new solutions and features to get the maximum value out of their IT investments.”
The acquisition of WalkMe, pending regulatory and shareholder approval, is expected to close in the third quarter of 2024. This move signifies SAP’s strategic intent to fortify its position in the digital adoption arena, enhancing its ability to support enterprise customers in navigating the complexities of modern software ecosystems.