(Bloomberg) – Salesforce Inc.’s Marc Benioff is moving forward with the biggest deal in the company’s history after fending off activist investors who criticized his reliance on acquisitions.
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Mr. Benioff is targeting Informatica Inc. with the aim of enhancing Salesforce's data integration and management capabilities, people familiar with the matter said.
The two companies are in advanced discussions and an agreement could be reached as early as a week, said the people, who requested anonymity because the negotiations were private. A final agreement may take longer than that, and there is a possibility that negotiations may end without an agreement.
A Salesforce spokesperson said the company does not comment on “rumors or speculation.” Informatica could not be reached for comment. The Wall Street Journal first reported on the meeting.
Informatica competes with Mulesoft, which is currently Salesforce's third-largest acquirer, Bloomberg Intelligence's Sunil Rajgopal wrote in a note. The partnership could further consolidate the software-as-a-service industry and potentially bring it under regulatory scrutiny, he added.
Salesforce CEO Benioff is grappling with activist hedge funds demanding tougher management of the company. Salesforce avoided a potential proxy fight with activist investor Elliott Investment Management last year following a series of strategic changes and a rising stock price.
Redwood City, California-based Informatica had a market value of about $11.4 billion as of Friday's close in New York. Shares have increased 36% since the beginning of the year to $38.48. The company, which helps customers manage data in the cloud, predicted in February that fiscal year sales would rise about 6% to $1.7 billion.
San Francisco-based Salesforce has been cutting costs and increasing profitability over the past year. The current focus is on revenue growth, which has slowed as companies curb spending on software.
Informatica would be the company's third, or perhaps second, largest acquisition out of 117 completed and pending deals, according to data compiled by Bloomberg. Salesforce's largest acquisition, the approximately $27 billion acquisition of business communications platform Slack Technologies, was completed in 2021.
If Informatica were to be acquired at a significant premium to its current stock price, the deal could rival Salesforce's $14 billion acquisition of Tableau Software in 2019, according to the data. Informatica's enterprise value, including debt, is more than $12 billion, according to the data.
Salesforce announced in 2018 that its 2018 acquisition of MuleSoft was valued at $6.5 billion.
Informatica was taken private in 2015 by private equity firm Permira and the Canada Pension Plan Investment Board in a $5.3 billion deal. They took the company public again in 2021, at a stock price of $29 per share. The stock peaked at nearly $39 two months later, but fell to nearly $14 last year.
Permira remains the company's largest shareholder with about 47% of Informatica shares, according to data compiled by Bloomberg. CPPIB holds approximately 29% of the shares.
(Updates Permira and CPPIB Informatica stakes in last paragraph.)
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