Technology
Monday, April 22nd, 2024 6:52 pm EDT
Key Points
- Informatica Denies Acquisition Talks: Informatica, an enterprise data management company, refuted reports of acquisition discussions with Salesforce following earlier rumors of a potential $10 billion deal.
- Market Reaction and Negotiation Breakdown: Informatica’s shares plummeted over 7% upon the announcement, contrasting with a minor 1% rise in Salesforce’s shares. Negotiations between the two companies faltered due to a failure to agree on terms, reportedly with Salesforce proposing a bid in the mid-$30s per share.
- Salesforce’s Acquisition Strategy and Activist Response: Salesforce CEO Marc Benioff’s history of pursuing mergers and acquisitions drew scrutiny from activists in 2023, prompting a campaign to curb the company’s spending. In response, Salesforce disbanded its M&A board committee, focused on rehiring talent, and implemented significant layoffs. Speculation around the Informatica talks suggests a potential shift in Salesforce’s M&A strategy, as indicated by analyst Don Bilson, who likened it to a readiness to resume acquisitions after a period of restraint.
Informatica, an enterprise data management company, dispelled rumors of acquisition talks with Salesforce on Monday, following earlier reports hinting at a potential $10 billion deal. Informatica’s shares dropped over 7% upon the news, contrasting with a modest 1% rise in Salesforce’s shares, which would have marked its largest acquisition since acquiring Slack in 2021. Negotiations faltered due to disagreement on terms, with Salesforce reportedly discussing a bid in the mid-$30s per share. Informatica’s CEO, Amit Walia, affirmed the company’s robust business fundamentals and anticipated discussing first-quarter financial results and outlook on May 1st. Notably, Informatica’s two largest shareholders, Canada’s Pension Plan and private equity firm Permira, who control over 75% of outstanding shares, would have needed to approve any deal. Salesforce investors also reacted negatively to the potential purchase, initially causing shares to decline over 7% when news surfaced. Salesforce CEO Marc Benioff’s historically acquisitive stance prompted activism in 2023 to curb the company’s spending, with Elliott Management, Inclusive Capital, Starboard Value, and ValueAct leading campaigns for change. In response, Salesforce disbanded its M&A board committee, prioritizing the rehiring of departed talent and implementing significant layoffs. Benioff enlisted ValueAct’s Mason Morfit to the board. The speculated talks suggest a potential shift in Salesforce’s M&A strategy, signaling a willingness to engage in acquisitions after a period of relative restraint, according to Gordon Haskett analyst Don Bilson. Bilson likened Salesforce’s past approach to a “diet” devoid of substantial M&A activity, suggesting that recent developments indicate a readiness to resume acquisition activity.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/22/informatica-not-in-acquisition-talks-with-salesforce.html
