Salesforce takeover report sends stock soaring.
Market valuation higher than $ 50B for first time
SAN FRANCISCO — Salesforce stock rocketed to its highest price in history Wednesday after a reported takeover bid for the cloud- software pioneer, which would be far too expensive for all but a handful of large tech companies.
The San Francisco company’s shares jumped as high as $ 78.46 Wednesday — pushing its market valuation higher than $ 50 billion for the first time — before settling down at the close to an 11.6 percent increase at $ 74.65. The large jump occurred right after Bloomberg News reported that the company had hired strategic advisers in response to a takeover bid from an unnamed company, citing anonymous sources.
“Salesforce does not comment on rumor or speculation,”
a company spokeswoman said Wednesday.
Salesforce forced its way into the 20 largest Silicon Valley technology companies by revenue last year, and ended Wednesday with the 10th- largest market cap among the region’s tech firms. Those gains would make Salesforce out of reach for all but the company’s richest rivals: A deal would probably have to be the largest in Silicon Valley tech history, surpassing the nearly $ 47 billion valuation Genentech received in its acquisition by Roche. Bloomberg pointed out that it would be the largest deal for a software company by far, with the current title belonging to the $ 27.5 billion buyout of First Data in 2007.
Companies that could manage the price tag and need the type of boost that Salesforce’s booming cloudsoftware business would provide is short, FBR Capital Markets analyst Daniel Ives said Wednesday, and the name at the top should be obvious.
“It’s long been discussed on the Street that Oracle eventually will have to make a game- changing acquisition,” Ives said in a phone interview. “So when you look at a situation like this, Oracle going after Salesforce would be the one that makes the most sense on paper, especially with the focus on the cloud.”
Salesforce CEO and cofounder Marc Benioff came from Oracle and has proved former boss Larry Ellison wrong on the demand for software- as- a- service, which allows programs to be delivered and updated over the Internet. Oracle has made a series of cloudbased acquisitions and has managed to make some advances in the cloud, but Ives said that a Salesforce acquisition would put it over the edge.
“It would fit in like a glove, it would make the most sense,” the analyst said.
The total list of potential acquirers would most likely be Oracle, Microsoft, SAP, Hewlett- Packard and IBM, based on need and capability, Ives said. Oracle ended 2014 with $ 43.8 billion in cash on hand — about the size of Salesforce’s valuation before Wednesday’s leap — and raised an additional $ 10 billion in debt financing Tuesday.
Microsoft has more cash on hand at more than $ 95 billion, but HP may have the greatest need: The Palo Alto company is planning to split its business in half and create a new company focusing on enterprise software and services. HP had less cash in its coffers than the other likely suspects, though, with less than $ 17 billion at last count.
Oracle received its own boost late in Wednesday’s session, and the Redwood City software company closed with a 0.5 percent advance at $ 44.73. Microsoft dropped 0.2 percent to $ 49.06 while showing off Windows 10’ s new tricks at its Build conference in San Francisco, and HP added 0.2 percent to $ 33.32.