Informatica, the enterprise data management company, has officially stated that they are not currently engaged in any talks with Salesforce regarding a potential acquisition. This announcement comes after initial reports hinted at Salesforce’s interest in a sizable $10 billion deal with Informatica. The news of this potential acquisition led to a 7% drop in Informatica’s shares while boosting Salesforce’s shares by approximately 1%.
The negotiations between the two companies reportedly fell through due to a failure to reach agreement on the terms of the deal. Sources familiar with the matter revealed that Salesforce was considering a bid in the mid-$30s per share. Informatica’s CEO, Amit Walia, emphasized the company’s strong business fundamentals and expressed anticipation for discussing their financial results and outlook on May 1.
It’s worth noting that Informatica’s major shareholders, such as Canada’s Pension Plan and private equity firm Permira, who collectively own over 75% of the company’s shares, would have needed to approve any potential acquisition deal. Salesforce’s investors also reacted negatively to the proposed deal, causing a significant drop in Salesforce’s stock price upon the news breaking.
Chairman and CEO of Salesforce, Marc R. Benioff, was present at the 54th annual meeting of the World Economic Forum in Davos, Switzerland, on January 18, 2024.
Image Source: Denis Balibouse | Reuters
In a related context, the persistent appetite of Salesforce’s CEO, Marc Benioff, for mergers and acquisitions has attracted the attention of various activists in 2023. These activists, including Elliott Management, Inclusive Capital, Starboard Value, and ValueAct, called for reforms within the company to curb excessive spending.
In response to the pressure, Salesforce made strategic changes such as dismantling its M&A board committee, focusing on re-hiring departed talent, and implementing significant layoffs. Notably, Benioff brought ValueAct’s Mason Morfit onboard the board in a bid to address the concerns raised by activist investors.
Analyst Don Bilson from Gordon Haskett highlighted that the rumors surrounding talks with Informatica indicate a potential shift in Salesforce’s approach towards mergers and acquisitions. He mentioned that Benioff’s previous avoidance of significant M&A activities may be evolving, as evidenced by the recent developments.
Despite the recent speculations and market reactions, both Informatica and Salesforce are now focusing on their respective business strategies and upcoming financial reports to navigate the evolving landscape of enterprise technology and acquisitions.
