Software AG kicks-off M&A splurge in US with €524m deal for to acquire StreamSets
Software AG has struck a deal to acquire US-based cloud data integration business StreamSets for €524 million, as the Germany-based firm makes good on its stated ambition to expand through merger-and-acquisition (M&A) in the US market. StreamSets, headquartered in San Francisco, has posted compound annual revenue growth (CAGR) of 70 percent over the last four years, to the end of 2021.
Software AG, emerging from a three-year internal change-programme, and with €344 million of new private investment in its pockets, said the new acquisition will complement its own well-established data integration services and newly-minted as-a-service model. Software AG’s portfolio connects and integrates data in a hybrid cloud application landscape, and StreamSets’ technology collects, consolidates and moves it.
A statement said: “The acquisition is the first in Software AG’s M&A strategy which is designed to accelerate growth by opening up access to new parts of its €61 billion total addressable market. In this case, the deal will see Software AG enter the cloud data integration portion of the wider data integration market, a segment growing 26 percent annually in a market projected to reach $3.5 billion by 2025.”
It continued: “This combination enables organizations to better unlock and capture value from data as it moves between on-premises applications, data streams, SaaS applications, legacy data stores and cloud data platforms like Amazon RedShift, Databricks and Snowflake. The combined hybrid iPaaS (integration-platform as-a-service) platform will deliver consolidated, conformed, continuous data to smart applications and the connected enterprise.
“This requires smart data pipelines that understand the structure and meaning of the data passing through them and have the ability to transport the data to a set of hybrid destinations, such as modern cloud data warehouses, data lakes, messaging systems and event hubs. In this way, the StreamSets DataOps Platform delivers modern data pipeline technology to solve a crucial part of the hybrid integration challenge for enterprise customers.”
The two companies’ channel strategies are the same. Both groups target the same enterprise customer segment and “buying personas” that reside in the same IT purchasing areas. There was something in the press release about shared values in terms of culture and innovation, as well. Software AG said it will sell the StreamSets product into its own customer base, and will also develop solutions with it, starting in the iPaaS space, to go-to-market “as one”.
The deal – worth €524 million, plus a retention package for the StreamSets management team – is subject to regulatory approval, but is slated to close by the summer. Software AG has annual revenue of around €800 million; it expects the deal to put it ahead of its €1 billion target for organic revenue in 2022, with growth of 12-16 percent; it expects a hit on (EBITA) profit of up to €17 million in 2022, but EBITA margin to be 25-30 percent for the year.
It said mid-term “synergy revenues” will exceed StreamSets’ stand-alone revenue in 2021.
Sanjay Brahmawar,chief executive at Software AG, said: “This acquisition is a major milestone for Software AG… We are welcoming outstanding colleagues with a track record of innovation and success. Their base in California also extends our presence in North America, and I am incredibly excited at the prospect of working with them to grow our business together.”
Girish Pancha, chief executive at StreamSets, said: “Our products are made for each other, and we see tremendous opportunity in the convergence of application integration and data integration to deliver smart applications. I have been admiring Software AG’s transformation from afar, and together, I believe we will accelerate our growth trajectory by unlocking digital transformation for our customers.”