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April 22, 2024

Salesforce kills bid for Informatica

Salesforce has reportedly backed away from a deal to buy Informatica that would have valued the data processing specialist at $11bn. 

By Greg Noone

Salesforce has ended its bid for Informatica after disagreeing on terms for the takeover. According to reporting by the Wall Street Journal, the customer relationship management software provider was originally offering to pay around $35 per share for Informatica before talks broke down this weekend. Earlier today, the latter confirmed that it was not “currently engaged in any discussions to be acquired.” Tech Monitor has approached both companies for comment. 

If it had taken place, Salesforce’s purchase of Informatica would have valued the latter at $11bn and would have been its largest acquisition since it bought messaging platform Slack for $28bn in 2021. Founded in 1993 and headquartered in Redwood, California, Informatica provides a range of data processing and integration services, in addition to cloud management capabilities. 

A photo of the entrance to Salesforce Tower in New York, used to illustrate a story about the abortive takeover bid by Salesforce for Informatica.
Salesforce’s abortive takeover bid for Informatica would have valued the latter at approximately $11bn. (Photo by Shutterstock)

Attempted Informatica bid echoes old Salesforce growth strategy

Salesforce’s attempted takeover of Informatica is the latest attempt by the enterprise software firm to diversify its service portfolio through acquisitions. In 2019, for example, the firm bought MuleSoft, an integration software provider, for $6.5bn. This was followed by a bid for Tableau, a data visualization firm, for $15.3bn in 2019. 

This string of acquisitions attracted the attention of activist investors last year, who expressed concerns that Salesforce’s growth strategy was inflating costs and depressing the firm’s profit-making potential. Its purchase of Slack in particular was criticised, with some investors fearing that Salesforce had overpaid for the messaging platform and had failed to plan adequately for its wider integration into the company. “That is a big part of the issue here,” one investor told the Financial Times in January 2023. “What investors really care about is capital allocation and [CEO Marc] Benioff had promised a pause on M&A and then reneged on those promises.”

Back from the brink

Concerns about Salesforce’s future persisted throughout the month after the firm announced it would cut approximately 10% of its workforce. By March, however, the company had bounced back, reporting revenue growth of 14% in its fourth-quarter results. Activist investors soon began divesting their stake in Salesforce, which announced it was resuming hiring by September. By the end of 2023, the firm had also redesigned Slack and publicly embraced the potential of AI across many of its products and services. 

It remains to be seen whether this positive news for Salesforce will continue into 2024. The market reaction to the news that Salesforce might was seemingly resuming its previous growth strategy by acquiring Informatica was unenthusiastic. After news broke that both firms were in advanced negotiations over the bid, shares in both firms fell by 7% and 6% respectively.

Read more: At Dreamforce, Marc Benioff is positioning Salesforce as the trusted face of enterprise AI

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