Shares of SAP jumped more than 12% after activist investor Elliott Management announced it has taken a 1% stake (worth $1.3 billion) in the German software maker, the Financial Times reported. Elliott also said it supports SAP’s plan, announced after its fiscal first-quarter earnings call today, to launch a review of its business aimed in part at increasing profitability in its cloud applications business.
The moves show that SAP is responding to investors’ frustration over the company’s inability to build a cloud business that is as profitable as rivals like Microsoft and Salesforce. SAP’s decision to spend $8 billion to acquire SaaS startup Qualtrics just before its IPO, a deal in which SAP paid the equivalent of 20 times revenue, has also reportedly not gone over well with some investors. With its review plan, SAP may be trying to avoid a battle with Elliott, which has successfully pushed for changes at other tech companies like Citrix Systems and eBay.