Elliott Investment Management has built a stake in Germany’s Software AG, betting on the planned takeover by US private equity firm Silver Lake Management or a counterbid, according to people familiar with the matter.
(Bloomberg) — Elliott Investment Management has built a stake in Germany’s Software AG, betting on the planned takeover by US private equity firm Silver Lake Management or a counterbid, according to people familiar with the matter.
The US hedge fund and other investors have been snapping up shares in the German software company in recent days, the people said, sending the stock above the €30-per-share proposed offer from Silver Lake announced on April 21.
Software AG’s shares jumped as much as 3.1% in early Friday trading. They were up 2.6% to €31.08 at 9:48 a.m. Friday in Frankfurt, valuing the company at about €2.3 billion ($2.5 billion).
Buyout firms are studying the feasibility of a counteroffer, some of the people said, asking not to be identified because the information is private. But any move faces the hurdle that Silver Lake has an agreement to buy 25.1% from the Software AG Foundation and management backing for the offer, which is more than a 50% premium.
It’s unclear whether the agreement with the foundation would allow them to sell their shares to a rival suitor bringing a higher bid, an option that’s usually included in such deals.
Software AG attracted interest from several buyout firms in late 2021, but in the end opted for an investment of €344 million from Silver Lake in convertible bonds. Chief Executive Officer Sanjay Brahmawar earlier this week welcomed a take-private and said the buyout firm is “aligned” with the company’s strategic direction and it isn’t planning to run a broader sale process.
With German companies, Elliott, run by billionaire Paul Singer, typically builds positions in takeover targets in a bet that the suitor will have to increase its price to gain full control. Silver Lake’s offer is subject to an acceptance threshold of 50% plus one share and regulatory clearances.
Spokespeople for Elliott and Software AG declined to comment. Representatives for Silver Lake didn’t respond to requests for comment.
In Germany, Elliott built a stake in Kabel Deutschland Holding AG and forced Vodafone Group Plc after a years-long battle to pay up for the remaining shares in 2020. Last year, the fund was among the investors who made Philip Morris International Inc. increase its offer for Swedish Match AB.
The hedge fund has also taken on European heavyweights including Bayer AG and drugmaker GSK Plc.
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