European software stocks rise on Silver Lake-Workday buyout report

European software stocks advanced on Monday after a report suggested U.S. private equity firm Silver Lake is in early-stage discussions regarding a potential buyout of Workday Inc., the enterprise software provider.

The report, citing unnamed sources familiar with the matter, stated that Silver Lake has approached Workday about a possible acquisition, though no formal agreement has been reached. Workday, which provides cloud-based financial management and human resources software, has not publicly commented on the report.

Shares of European software companies tracked by the STOXX Europe 600 Software & Computer Services Index rose 1.8% by mid-morning trading, outperforming the broader European market. Workday’s U.S.-listed shares climbed 3.5% in pre-market trading following the report.

Silver Lake, known for its investments in technology and software firms, has not confirmed the discussions. The firm has a history of large-scale deals, including its 2020 acquisition of Dell Technologies’ VMware unit for $10 billion.

Analysts noted that a potential buyout would mark one of the largest private equity deals in the enterprise software sector in recent years, given Workday’s market capitalization of approximately $50 billion. The company’s shares have gained roughly 20% over the past year, reflecting strong demand for cloud-based enterprise solutions.

The report did not specify a potential deal structure or timeline. If a transaction were to proceed, it would likely face regulatory scrutiny, particularly given Workday’s global operations and data-sensitive business model.

European software stocks have lagged behind U.S. peers in recent years, but the sector has shown signs of recovery in 2024 amid improving corporate spending on digital transformation. The STOXX Europe 600 Software & Computer Services Index is up 8% year-to-date, compared with a 12% gain for the U.S. Nasdaq Software Index over the same period.