Acquisition Of Salesforce.com, Inc. (CRM) Could Make A Strategic Fit For Oracle (ORCL), SAP (SAP), IBM, or Microsoft (MSFT)
An acquisition of Salesforce.com, Inc. (NYSE:CRM) would significantly bolster the efforts of the new owner in cloud computing in general and more specifically customer relationship management software. Among the companies that could find Salesforce a particularly useful asset are Oracle Corporation (NYSE:ORCL) and SAP SE (ADR) (NYSE:SAP). The others are the International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT). These companies are struggling to expand in cloud software business, and latecomers to cloud like Oracle and IBM could be more interested in closing a deal with Salesforce.
According to Oracle’s CEO, Safra Catz, the acquisition of Salesforce.com, Inc. (NYSE:CRM) would seriously tilt the scales in software market. However, Catz went on to say that the potential disruption from a rival buying out Salesforce would be great news for Oracle, but didn’t elaborate. Some reports have cited that Oracle is among the companies showing interest for Salesforce to bring it under its fold. However beyond the comments to Bloomberg by Catz, Oracle has largely remained mum about its buyout ambitions for Salesforce.
If Oracle acquires Salesforce.com, Inc. (NYSE:CRM), the company is expected to have a much easier time integrating the asset. The major reason for that is that Salesforce already uses database technology that is owned by Oracle.
People with insider knowledge have cited that SAP SE is considering Salesforce.com, Inc. (NYSE:CRM) buyout, but it is unclear whether the two companies have already initiated discussions.
Microsoft’s $20 billion cloud target
Microsoft and Salesforce.com, Inc. (NYSE:CRM) have recently been able to close gaps in their relationship thanks to the rise of Satya Nadella to the CEO role at Microsoft. At Microsoft, the plan is to make the cloud division a $20 billion business by end 2018 fiscal year. An acquisition of Salesforce would significantly help Microsoft bolster its cloud campaign.
Update: Bloomberg reports that Microsoft is considering a bid for Salesforce. Reportedly the company had always intended on bidding if the company came up for sale. Upon hearing the news someone was about to make an offer Microsoft appears ready to jump in.
IBM in catch-up game
IBM and cloud also significantly benefit from the acquisition of Salesforce.com, Inc. (NYSE:CRM) as it tries to catch up in the cloud market.
While speculations have cited Oracle, IBM, Microsoft and SAP as being interested in acquiring Salesforce.com, Inc. (NYSE:CRM), representatives of the companies have either declined to comment on the rumors or have denied any talks.
Salesforce very richly valued
One very large stumbling block to any acquisition is Salesforce’s market cap of greater than $45 billion and high valuation. The company is trading at almost 9 times sales, and has a free cash flow multiple of 45. Nonetheless, an aging tech giant could find interest in bridging the gap with Salesforce even though unique challenges remain in any such large acquisition.
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