Salesforce has agreed to pay $6.5 billion in a cash and stock deal for business software company MuleSoft, its biggest acquisition ever.
Jonathan Vanian of Fortune had the news:
The sales software giant announced the deal on Tuesday after Reuters reported that the two companies were in talks. Salesforce said that the deal “represents a 36% premium over MuleSoft’s closing share price” on Monday.
MuleSoft’s technology is used by customers to link their business apps, databases, and corporate IT infrastructure into a unified system. Customers include Coca-Cola, Barclays, and Anheuser-Busch.
The acquisition comes a year after MuleSoft went public and spent the year increasing sales while trying to manage its growing losses. In the company’s fourth quarter, it brought in $88.7 million in sales, which was a 60% bump from the previous year during the same time period. Mulesoft had an operating loss of $25.5 million in its fourth quarter, a nearly 100% jump from the $12.8 million operating loss it recorded in the same quarter of the previous year.
MuleSoft CEO Greg Schott told Fortune on the day his company went public that he has always admired Salesforce for popularizing software for managing customers and sales, and turning what used to be an obscure tech product into a multi-billion dollar business that’s expanding into other areas.
Ron Miller of TechCrunch reports that MuleSoft expands Salesforce’s opportunities with customers:
This is particularly important for Salesforce, which tends to come in and work with a company across enterprise systems. As it builds out its artificial intelligence and machine learning layer, which it has branded as Einstein, it needs access to data across the company. A company like MuleSoft gives them that.
But of course Salesforce gets more than tech with this purchase, which it can integrate into its growing family of products. It also gets major customers like Coca-Cola, VMware, GE, Accenture, Airbus, AT&T and Cisco. While Salesforce may have a presence in some of these companies already, MuleSoft gives them entrée into areas they might not have had, and gives them the ability to expand that presence.
What’s more, the company has big revenue goals. Having reached $10 billion in revenue faster than any software company ever has, a point that chairman and co-founder Marc Benioff has been happy to make, they have actually set their sights on $60 billion by 2034. That’s a long way away, of course, but having a company like MuleSoft in the fold, which made almost $300 million in revenue in fiscal 2017, will certainly help.
Peter Wells of The Financial Times reports that MuleSoft will help connect applications, data and devices:
The acquisition will provide Salesforce with Mulesoft’s expertise in developing networks that connect applications, data and devices, which it will then use to power its own cloud-based portfolio.
Salesforce has offered $36 in cash and 0.0711 of its own shares for each Mulesoft share, working out to a price of $44.89, or a premium of 36 per cent to the target’s closing price on March 19.
Mulesoft shares closed 27.2 per cent higher today to $42 following media reports Salesforce was in advanced talks with the company. They gained a further 4.4 per cent to $43.81 in after-hours trade on the Nasdaq. Confirmation of the deal came after closing bell.
Salesforce shares closed 0.1 per cent higher to $125.12, but were down 2.3 per cent in after-hours trade.
Marc Benioff, Salesforce chief executive, said: “Together, Salesforce and Mulesoft will enable customers to connect all of the information throughout their enterprise across all public and private clouds and data sources — radically enhancing innovation.”
