US Markets
Thursday, June 6th, 2024 3:20 pm EDT
Key Points
- Increased Investment and Market Reaction: Mason Morfit, a Salesforce board member and co-CEO of ValueAct, increased his stake in Salesforce to just under $1 billion by acquiring $99 million worth of shares. This disclosure boosted Salesforce shares by 3.5% in morning trading.
- Activist Pressure and Company Response: Salesforce faced pressure from activist investors due to CEO Marc Benioff’s high-cost acquisitions and underperforming stock. In response, the company implemented layoffs, dissolved its M&A committee, and delivered strong earnings to avoid a board reshuffle.
- Future Growth and Acquisition Plans: Despite previous activist pressure, there are signs that Benioff may be considering growth through acquisitions again, as indicated by Salesforce’s rumored interest in data management firm Informatica earlier this year.
Mason Morfit, a Salesforce board member and co-CEO of activist investor ValueAct, has significantly increased his stake in Marc Benioff’s software firm to nearly $1 billion. Earlier this week, Morfit acquired $99 million worth of Salesforce shares, just days after the company experienced its first revenue miss since 2006. This move was disclosed in a regulatory filing on Thursday, leading to a 3.5% rise in Salesforce shares during morning trading.
ValueAct’s enhanced investment could be seen as a vote of confidence in Benioff and Salesforce, which reported fiscal first-quarter earnings in late May that fell short of analyst expectations. This miss, along with weaker-than-expected future guidance, caused Salesforce shares to plummet by up to 17%. Morfit joined Salesforce’s board in 2023 amid a period when the company faced scrutiny from several activist investors dissatisfied with Benioff’s costly acquisition strategies, underperforming stock, and what was perceived as an excessive workforce.
In response to the activist pressure, Salesforce and Benioff took swift actions, including significant layoffs, disbanding the company’s board-level M&A committee, and delivering an impressive earnings report that ultimately prevented a potential board overhaul. Other activist investors at the time included Elliott Management, Dan Loeb’s Third Point, and Starboard Value. Elliott had even proposed a slate of directors for election at Salesforce’s annual meeting but withdrew their slate following the company’s positive turnaround.
Despite these measures, there are signs that Benioff might be considering growth through acquisitions again. Earlier this year, Salesforce’s rumored interest in acquiring data management firm Informatica caused fluctuations in its share price before Informatica announced it was not for sale.
Morfit, who has led ValueAct’s investments since 2020 after founder Jeff Ubben stepped back, has a history of being a constructive investor, previously serving on Microsoft’s board. He is known for working collaboratively with management to enhance company performance. Earlier this year, Morfit also expressed support for Disney CEO Bob Iger as the entertainment giant faced a proxy battle led by Trian’s Nelson Peltz and former Marvel executive Ike Perlmutter.
Salesforce shares reached their previous 2021 highs earlier this year but have since declined, currently down 4% year-to-date.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/06/salesforce-valueact-mason-morfit-activist-benioff.html
