Software group: Investor Elliott buys himself from SAP

Despite an expensive staff change, SAP has raised its earnings forecast. The US hedge fund Elliott wants to benefit from it - he has bought a stake worth 1.2 billion euros.



For the first time, the US hedge fund Elliott has shopped in Europe with a technology group. The activist investor has made public a stake in Europe's largest software group SAP. The investment has a value of 1.2 billion euros, said Elliott. This is just under one percent of the current market value of around 130 billion euros.

In the US, Elliott is involved in the tech sector with online retailer Ebay, computer manufacturer Dell and IT service provider Cognizant.

Behind Elliott is investor Paul Singer. The hedge fund is known for its often harsh dealings with top corporate management. Among other things, the investor recently visited the industrial group Thyssenkrupp, the energy group Uniper and the plant manufacturer Gea enforced changes.

Looking at SAP Elliott said it was time to reap the benefits of past investments. At the same time, the US hedge fund was behind SAP management. "Elliott fully supports the initiatives announced today," the investor said.

Staff restructuring brings SAP quarterly loss

Previously, SAP had announced its quarterly figures and called new targets. Although the business is doing well, high costs for the ongoing reorganization of staff have pushed the software group into negative territory for the first time in a long time in a single quarter. The loss amounted to 108 million euros - after 708 million euros profit in the same period last year. Looking at the year as a whole, SAP will be in the black, said CFO Luka Mucic.

Excluding the conversion costs, the quarter was so good for the group that CEO Bill McDermott increased his earnings forecasts. By 2023, McDermott promised to continuously increase SAP's profitability. Also contributing to this is the job cuts, which should save from 2020 to € 750 to 850 million annually.

Number of employees should rise initially

The company announced in January that it would retrain some 4,400 employees this year, transfer it to other positions, and also send early retirement compensation so that the company can keep up with the changes in the technology industry. Works council and management recently negotiated job security.

Despite the renovation, the number of employees will continue to rise this year. Most recently, thanks to recent acquisitions, SAP had around 98,700 employees; next year, CEO Bill McDermott said it could be 105,000.

ref: spiegel