Reports: Salesforce.com May Be Oracle, Microsoft Acquisition Target
Joseph F. Kovar and Joseph Tsidulko
Salesforce.com shares soared 12 percent Wednesday, to $74.65, after Bloomberg News reported that the cloud computing software pioneer could be a takeover target.
Bloomberg reported that Salesforce.com is "working with financial advisors after being approached by a potential acquirer." The Bloomberg report quoted an unidentified source as saying "bankers may help rebuff any suitor or work out an eventual sale."
With a market capitalization of $47.01 billion, a Salesforce.com acquisition would be one of the largest technology acquisitions ever. Such a deal, analysts said, could only be financed by one of a handful of Fortune 100 companies such as Oracle, Microsoft, IBM or SAP.
[Related: CTO Ellison: Oracle Is Poised To School Salesforce.com In The Cloud ]
Several Wall Street analysts cited Oracle as the most likely buyer, while a report in Fortune centered on Microsoft as the most likely company eyeing Salesforce.
Oracle, Microsoft and Salesforce.com all refused to comment.
Andrew O'Driscoll, national partner executive in the Salesforce business unit at Perficient, a solution provider headquartered in St. Louis, said he believes the most likely buyer is either Oracle or Microsoft, as both companies have strong product ties and product integration with Salesforce.com popular CRM cloud application.
O'Driscoll said he once worked as a product manager at Salesforce before starting his own business, which was acquired by Perficient to from its Salesforce practice. He said he wouldn't be surprised if Salesforce is acquired by one of the legacy IT companies.
"They've built a fantastic company, an amazing product and an amazing following," he said of Salesforce. "Who wouldn't want to buy Salesforce if you had the money? I think they're the envy of many companies because of what they've done."
If Salesforce were acquired by a competitor like Oracle or Microsoft, the winners would most likely be large system integrators like Perficient that not only have Salesforce practices, but also work with the acquiring company. "It will strengthen the hand of a company that partners with both because they're all under one roof now," O'Driscoll told CRN.
A deal could also be a boon for large solution providers that have established practices around whoever buys Salesforce, expanding their foothold in a market where they already have presence, O'Driscoll said.
"It's probably going to be bad for the pure-play smaller regional partners. Certainly bad for the small mom-and-pop market," he added.
A deal between Salesforce.com and Oracle is very possible, wrote Daniel Ives, an analyst with Arlington, Va.-based financial analyst firm FBR Capital Markets, in a research report.
Salesforce.com's current share price of about $75 would give the company an enterprise value of nearly $50 billion, making it "one of the largest acquisitions in enterprise software history," wrote Ives.
While HP, IBM and Microsoft are all potential suitors of Salesforce.com, Oracle is the most realistic potential purchaser of the company, Ives wrote.
One big driver of such a deal would be Oracle's need to go big in the cloud, said Ives."Oracle is desperate to establish itself as a leader in the cloud, and acquiring the leading cloud company and bringing on board a visionary leader in Marc Benioff would help toward accomplishing this goal," he wrote.
Other reasons include the fact that Oracle needs to make a "transformative move" in the face of competitive pressures from a wide range of SaaS industry leaders; the fact Salesforce.com was built on the Oracle database, which would ease technology integration; the presence of several former Oracle veterans including CEO Marc Benioff and President Keith Block at Salesforce.com; and the fact that Oracle has the financial resources to make such an acquisition work.
"Ultimately, we view this more as Oracle trying to make a bold, decisive move to stake its claim in the cloud before it falls even farther behind," he wrote.
Fortune magazine reported that Microsoft has the cash to make such an acquisition, and knows that its competitive offering to the Salesforce.com technology is "inferior" to that of its rival.
Furthermore, Microsoft and Salesforce.com have become closer in the past year in terms of partnerships. One reason for Microsoft to make the acquisition is culture, Fortune wrote.
"(Microsoft CEO Satya) Nadella would consider the move a radical opportunity to shake up Microsoft’s culture by relocating the company’s headquarters to San Francisco and leaving behind some of Microsoft’s hidebound ways," it wrote.
An acquisition of Salesforce.com by any vendor would be a huge undertaking given Salesforce.com's market cap, said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 234 on the 2014 CRN Solution Provider 500.
"If someone does make a deal, the question is, will they have the wherewithal to grow the business or continue on the trajectory that Salesforce.com is on," Venero told CRN. "There are a lot of unknowns associated with a deal of this size. There would have to be a tremendous amount of discovery that would have to take place and there would be regulatory and compliance issues that would have to be dealt with by the acquirer."
Steven Burke contributed to this story.
PUBLISHED APRIL 29, 2015