SAP will unload its 423 million shares of Qualtrics following the latter’s acquisition by Silver Lake and CPP Investments. The move comes as part of a “strategic initiative” to streamline the SAP portfolio and focus on cloud growth.

Qualtrics is a Utah-based startup that procures cloud-based subscription software for experience management.

At a purchase price of $18.15 per share, the $7.7 billion transaction is expected to close in the second half of 2023 and values Qualtrics at $12.5 billion. Earlier this year SAP announced plans to sell its stake in Qualtrics concurrent with a decision to cut 2.5% of its workforce.

Qualtrics’ stock surged as much as 27% after that SAP announcement, and raised again more than 6% when the acquisition was finalized.

“Silver Lake has both the operational expertise and the track record with software companies to help Qualtrics extend its leadership in the XM category it pioneered,” Christian Klein, CEO of SAP SE, said in a company announcement. “Since we acquired Qualtrics in 2019 the company has more than tripled its revenue while delivering profitability.”

SAP bought Qualtrics in 2018 for $8 billion on the eve of the cloud startup moving toward a public offering. Qualtrics co-founder Ryan Smith acquired a majority stake in the National Basketball Association’s Utah Jazz for nearly $1.7 billion after the SAP acquisition, and personally made $153 million when SAP brought the company public in 2021.

Smith remains the chair of Qualtrics with a stake worth more than $200 million, and is expected to continue to have a “meaningful equity interest in the private company” with the Silver Lake acquisition.

According to Klein, SAP intends to “remain a close go-to-market and technology partner, servicing joint customers and continuing to contribute to Qualtrics’ success.”

When SAP announced plans to cut 3,000 jobs this year, the German vendor said it would conduct “a targeted restructuring program in selected areas of the company.”

“We are further focusing our portfolio in areas where we are strongest to continue our accelerated growth,” Klein said during the company’s fourth-quarter 2022 earnings call.

Around $300 million in restructuring costs associated with the program is expected to be recognized in the first quarter 2023, impacting operating profit, SAP said in an announcement. The program is expected to provide a moderate cost benefit in 2023, and more than $300 million in annual cost savings beginning in 2024.

The decision to divest its 71% stake of Qualtrics will help SAP hone restructuring efforts, and is a “continuation of the strategy we set at the time of the Qualtrics IPO in 2021,” the vendor explained in a statement.

“SAP believes that this potential transaction could unlock significant value for both companies and their shareholders: for SAP, to focus more on its core cloud growth and profitability; for Qualtrics, to extend its leadership in the XM [experience management] category that it pioneered.”