Workday, one of the world's three largest personnel and finance management software corporations, is expected to be acquired by a private equity firm.
Reuters reported on the 13th (local time), citing sources familiar with the matter, that U.S. private equity giant Silver Lake is in talks to acquire Workday. If the transaction is completed, it is expected to be one of the largest mergers and acquisitions (M&A) in the software industry's history.
According to the sources, Silver Lake is also pursuing ways to bring in additional investors. Last year, Silver Lake joined hands with the Public Investment Fund (PIF) of Saudi Arabia and Affinity Partners to pursue an acquisition transaction to take game company Electronic Arts Inc. (EA) private at about $55 billion.
News of the acquisition talks sent Workday shares up 17.8%, boosting its market capitalization to $51.1 billion (about 72 trillion won). It instantly recouped this year's decline of about 15%. Workday shares had been weak on concerns over a "Saaspocalypse," the idea that artificial intelligence (AI) would replace software. They have fallen more than 40% from the 2024 peak.
This AI-driven uncertainty has also depressed software corporations M&A transactions across the private equity industry. Reuters explained, "That's because the spread of AI has made it even harder to assess the future growth potential and valuations of traditional software corporations."
In fact, the year's major transactions have been limited to Hg Capital's acquisition of OneStream (about $6.4 billion) and Thoma Bravo's acquisition of Dayforce (about $12.3 billion).
If the Workday acquisition goes through, it is expected to be much larger in scale. Whether it succeeds will likely serve as an opportunity to gauge private equity's appetite for investing in traditional software corporations.
Founded in 2005, Workday provides human resources and finance cloud software to 11,500 corporations worldwide, including Netflix, U.S. Bank, and Thomson Reuters. Last year's revenue was $9.6 billion, up 13% from the previous year. Workday co-founder Aneel Bhusri returned as chief executive officer (CEO) in February to respond to the AI-driven software crisis.