EQS-News: Silver Lake to launch public takeover offer for Software AG supported by Software AG Foundation

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

Silver Lake to launch public takeover offer for Software AG supported by Software AG Foundation

• Offer Price of EUR 30.00 per share, representing a premium of 53 percent to Software AG’s last closing share price on 20 April 2023, a premium of 48 percent to Software AG’s three-months VWAP, and a premium of 36 percent to median broker target price
• Foundation has signed a binding share purchase agreement to sell 25.1% stake in Software AG to Silver Lake and is fully supportive of the Takeover Offer
• Silver Lake has entered into and signed an investment agreement with Software AG, and the Management Board and the Supervisory Board of Software AG are fully supportive of expanding the strategic partnership with Silver Lake and intend to recommend that shareholders accept the takeover offer
• Silver Lake had already invested in Software AG EUR 344 million via a convertible bond in February 2022
• Silver Lake supports Software AG’s business strategy and enhancing the customer value proposition
• Takeover offer will be subject to a minimum acceptance threshold of 50 percent plus one Software AG share. Silver Lake and Management Board intend to delist the Company as soon as practically possible after closing
• Silver Lake does not require a DPLTA to finance the Takeover Offer and hence does not intend entering into a DPLTA

21 April 2023 – Blitz 22-449 SE, a holding company controlled by funds managed or advised by Silver Lake ("Silver Lake") today announced its decision to make a voluntary public takeover offer ("Takeover Offer") for all no-par value registered shares ISIN: DE000A2GS401 of Software Aktiengesellschaft (the “Company”). The Company’s Management Board and the Supervisory Board support the expansion of the strategic partnership and, subject to their fiduciary duties, intend to recommend that shareholders accept the takeover offer. Silver Lake has today also entered into a share purchase agreement with Software AG - Stiftung (“Foundation”) to acquire a stake of 25.1% of all outstanding Software AG shares from the Foundation. The Foundation is in full support of the Takeover Offer.

The Takeover Offer will be made at a price of EUR 30.00 per Software AG share in cash (“Offer Price”). Software AG’s shareholders will receive a significant and highly attractive premium of 53 percent to the closing price of EUR 19.59 per share on 20 April 2023, being the last business day prior to this announcement. The Offer Price also represents a significant and highly attractive premium of 48 percent to the three-months volume-weighted average share price (“VWAP”) of EUR 20.32 and a significant and highly attractive premium of 36 percent to the median broker target price of EUR 22.00 according to targets published in the last three months on Bloomberg, each as of 20 April 2023.

The Takeover Offer will be subject to a minimum acceptance threshold of 50% of all outstanding Software AG shares plus one share, including the ca. 25.1% of Software AG shares that Silver Lake will acquire from the Foundation under the share purchase agreement. The Takeover Offer will be subject to further customary conditions, including the receipt of applicable regulatory approvals. The Foundation will continue to own 5% of shares. The retained 5% of shares are subject to a lock-up.

Silver Lake had initially invested EUR 344 million in Software AG in February 2022 via convertible bonds - the first German PIPE investment (private investment in public equity) by any US technology investment firm - which upon conversion would represent approximately 9% of issued Software AG shares.

Silver Lake signed an Investment Agreement with Software AG today, which sets out the framework for an extended strategic partnership with the full support of the Company. Subject to their fiduciary duties, the Management Board and the Supervisory Board intend to recommend that Software AG shareholders accept the Takeover Offer.

A domination and/or profit and loss transfer agreement is not required for Silver Lake to finance the Takeover Offer or to realize Silver Lake’s economic and strategic objectives. Hence, Silver Lake does not intend to enter into a domination and/or profit and loss transfer agreement with Software AG. Silver Lake intends to as soon as practically possible delist the Company following closing of the Takeover Offer, including through a potential delisting offer. In the Investment Agreement the Company has agreed to fully support Silver Lake’s intention and make all efforts to pursue a delisting of the Company.

The Company has, in partnership with Silver Lake, successfully progressed its strategic transformation programme with a rapid shift towards a subscription and software-as-a-service (SaaS) model, investments to cloud-enable the product portfolio and the complementary acquisition of StreamSets. The Management Board and Silver Lake believe that Software AG will be significantly better able to execute on its future strategy as a privately held company under Silver Lake’s ownership, with the aim to simplify and refocus the Company’s business, amidst a challenging macroeconomic environment and considering the required operational and financial long-term investments.

Dr. h. c. Peter Schnell, CEO of the Foundation and Founder and former CEO of Software AG, said: “We welcome the proposed acquisition of Software AG by Silver Lake. Silver Lake have been great partners to Software AG and to us since their initial investment, and through working together on the future of the Company we have developed a deep and trusted relationship. We leave Software AG under the good stewardship of Christian Lucas, Silver Lake and the Management Board, whom we wish all the best as they embark on transforming the Company over the next years. They have our full support and encouragement.”

Christian Lucas, Co-head EMEA at Silver Lake, said: “Since our initial investment into Software AG in February 2022, we have worked closely with the Company and the Foundation as its largest shareholder to help accelerate the Company’s transformation. As we embark on a multi-year journey of operational and financial investment to unlock Software AG’s potential, we believe our offer provides shareholders with a highly attractive proposition with a significant premium of more than 50% to the current share price. We would like to thank the Foundation and Dr. Schnell for the great partnership we had since our initial investment and are delighted to have been chosen as the new stewards of the Company they built over more than five decades.”

Silver Lake is supported by J.P. Morgan as financial advisor and financing provider, and Hengeler Mueller (transaction counsel) and Kirkland & Ellis (financing) as legal advisors. PJT Partners is acting as financial advisor and Clifford Chance as legal advisor to Software AG. Gleiss Lutz is acting as legal adviser to the Software AG Supervisory Board.

The voluntary public takeover offer will be made pursuant to an offer document to be approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) ("BaFin"). This offer document will be published following receipt of permission from BaFin, at which point the public takeover offer will commence. The offer document (in German and a non-binding English translation) and other information pertaining to the public takeover offer will be published on the following website: www.offer-2023.com.

About Silver Lake

Silver Lake is a global technology investment firm, with more than $95 billion in combined assets under management and committed capital and a team of professionals based in North America, Europe and Asia. Silver Lake's portfolio companies collectively generate more than $282 billion of revenue annually and employ more than 713,000 people globally. For more information about Silver Lake and its portfolio, please visit http://www.silverlake.com.

About Software Aktiengesellschaft

Software AG simplifies the connected world. Founded in 1969, it helps deliver the experiences that employees, partners and customers now expect. Its technology creates the digital backbone that integrates applications, devices, data and clouds; empowers streamlined processes; and connects “things” like sensors, devices and machines. It helps 10,000+ organizations to become a truly connected enterprise and make smarter decisions, faster. The Company has about 5,000 employees across more than 70 countries and annual Group revenue of over €950 million.

About Software AG Stiftung

The Foundation is an independent charitable foundation under German civil law with headquarters in Darmstadt, Germany. The Foundation is not a corporate foundation; rather, the Foundation is the principal shareholder in Software AG, also located in the research town of Darmstadt. The founder of both, Software AG and the Foundation, is Dr. h. c. Peter Schnell, who in the 1990s transferred all shares in Software AG to the Foundation.

Since its founding, the Foundation has been using the profits on around 1.4 billion euros in foundation assets to support projects organized by independent charitable organizations that directly and exclusively serve the common good. The Foundation supports initiatives not only in the areas of Education, Children and Youth, Assistance for the Elderly and Individuals with Disabilities but also in Anthroposophical Medicine as well as scientific and practically-oriented projects in Nature and Agriculture. The Foundation's funding focuses on Germany and Europe.

Disclaimer and Forward-Looking Statement

This press release is neither an offer to purchase nor a solicitation of an offer to sell Software AG shares. The final terms of the Takeover Offer as well as other provisions relating to the Takeover Offer will be communicated in the offer document after BaFin has permitted the publication of the offer document. Silver Lake reserves the right to deviate from the key items presented here in the final terms and conditions of the Takeover Offer to the extent legally permissible. Investors and holders of Software AG shares are strongly advised to read the offer document and all other documents relating to the Takeover Offer as soon as they have been made public, as they will contain important information. The offer document for the Takeover Offer (in German and a non-binding English translation) with the detailed terms and conditions and other information on the Takeover Offer will be published after approval by BaFin amongst other information on the internet at www.offer-2023.com.

The Takeover Offer will be implemented exclusively on the basis of the applicable provisions of German law, in particular the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz - WpÜG), and certain securities law provisions of the United States of America relating to cross-border takeover offers. The Takeover Offer will not be conducted in accordance with the legal requirements of jurisdictions other than the Federal Republic of Germany or the United States of America (as applicable). Accordingly, no notices, filings, approvals or authorizations for the Takeover Offer have been filed, caused to be filed or granted outside the Federal Republic of Germany or the United States of America (as applicable). Investors and holders of Software AG shares cannot rely on being protected by the investor protection laws of any jurisdiction other than the Federal Republic of Germany or the United States of America (as applicable). Subject to the exceptions described in the offer document and, where applicable, any exemptions to be granted by the respective regulatory authorities, no takeover offer will be made, directly or indirectly, in those jurisdictions in which this would constitute a violation of applicable law. This announcement may not be released or otherwise distributed in whole or in part, in any jurisdiction in which the Takeover Offer would be prohibited by applicable law.

Silver Lake reserves the right, to the extent permitted by law, to directly or indirectly acquire additional Software AG shares outside the Takeover Offer on or off the stock exchange, provided that such acquisitions or arrangements to acquire are not made in the United States, will comply with the applicable German statutory provisions, in particular the WpÜG, and the Offer Price is increased in accordance with the WpÜG, to match any consideration paid outside of the Takeover Offer if higher than the Offer Price. If such acquisitions take place, information on such acquisitions, including the number of Software AG shares acquired or to be acquired and the consideration paid or agreed, will be published without undue delay if and to the extent required under the laws of the Federal Republic of Germany, the United States or any other relevant jurisdiction. The Takeover Offer will relate to shares in a German company admitted to trading on the Frankfurt Stock Exchange and will be subject to the disclosure requirements, rules and practices applicable to companies listed in the Federal Republic of Germany, which differ from those of the United States and other jurisdictions in certain material respects. The financial information relating to Silver Lake and Software AG included elsewhere, including in the offer document, will be prepared in accordance with provisions applicable in the Federal Republic of Germany and will not be prepared in accordance with generally accepted accounting principles in the United States; therefore, it may not be comparable to financial information relating to United States companies or companies from other jurisdictions outside the Federal Republic of Germany. The Takeover Offer will be made in the United States pursuant to Section 14(e) of, and Regulation 14E under, the Exchange Act, and otherwise in accordance with the requirements of the laws of the Federal Republic of Germany. Shareholders from the United States should note that Software AG is not listed on a United States securities exchange, is not subject to the periodic requirements of the Exchange Act and is not required to, and does not, file any reports with the United States Securities and Exchange Commission.

Any contract entered into with Silver Lake as a result of the acceptance of the planned Takeover Offer will be governed exclusively by and construed in accordance with the laws of the Federal Republic of Germany. It may be difficult for shareholders from the United States (or from elsewhere outside of Germany) to enforce certain rights and claims arising in connection with the Takeover Offer under United States federal securities laws (or other laws they are acquainted with) since Silver Lake and Software AG are located outside the United States (or the jurisdiction where the shareholder resides), and their respective officers and directors reside outside the United States (or the jurisdiction where the shareholder resides). It may not be possible to sue a non-United States company or its officers or directors in a non-United States court for violations of United States securities laws. It also may not be possible to compel a non-United States company or its subsidiaries to submit themselves to a United States court’s judgment.

To the extent that this document contains forward-looking statements, they are not statements of fact and are identified by the words "intend", "will" and similar expressions. These statements express the intentions, beliefs or current expectations and assumptions of Silver Lake and the persons acting in concert with it. Such forward-looking statements are based on current plans, estimates and projections made by Silver Lake and the persons acting in concert with it to the best of their knowledge, but are not guarantees of future accuracy (this applies in particular to circumstances beyond the control of Silver Lake or the persons acting in concert with it). Forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and are usually beyond Silver Lake's control or the control of the persons acting in concert with it. It should be taken into account that actual results or consequences in the future may differ materially from those indicated or contained in the forward-looking statements. It cannot be ruled out that Silver Lake and the persons acting in concert with it will change their intentions and estimates stated in documents or notifications or in the offer document yet to be published after publication of the documents, notifications or the offer document.