Salesforce, a company that delivers small business and enterprise CRM solutions for IT, customer services, and marketing, recently revealed that they would be expanding their portfolio. The brand announced that they will be purchasing the US software creator “MuleSoft Inc.” for around $5.90 billion, or £4.2 billion in a combined stock and cash agreement. According to press releases, the purchase is part of Marc Benioff’s quest to improve the cloud portfolio for the brand with a range of new technology.
If the purchase goes ahead successfully, financial analysts revealed that MuleSoft’s shareholders would be given around $36 in cash, and a portion of their own Salesforce share, which offers a premium of 36% over MuleSoft’s numbers at the beginning of the week.
A Natural Fit for MuleSoft and Salesforce
The shares for MuleSoft were up by around 5% following the extended trading period after the announcement, while Salesforce shares fell by over 2% after the bell. Reports suggest that including debt, the deal would have been valued at around $6.5 billion, which means that Salesforce is getting a good deal for their new software creation company.
An analyst at Wedbush Securities, Steve Koenig, noted that it’s a natural fit for Salesforce to connect with MuleSoft. In his opinion, Salesforce is a company that’s designed to help consumers move to the cloud and improve their digital transformation (DX) strategies. Since much of the shift to a cloud environment starts with a powerful CRM, Salesforce believes that MuleSoft will help to minimize the friction associated with transforming a business with a more complete overall solution.
In March 2017, MuleSoft listed itself on the New York Stock Exchange with a price of approximately $17 per share. However, in the first day of trading, it achieved around 40% closure, which meant that its market value soared to $3 billion.
Investing in New Opportunities
The Venture Capital side of Salesforce “Salesforce Venture” led a round of funding into MuleSoft in 2015 which raised around $128. Salesforce currently holds more than 18% of the global market for customer relationship management, followed by Oracle who only holds approximately 94% according to figures released in 2016.
For Salesforce, this new investment will be a powerful way to accelerate their lead in the CRM world. Currently, MuleSoft has a reputation for creating effective software that provides enterprises with the tools they need to integrate a range of valuable applications, disparate data, and devices. Not only did MuleSoft serve Salesforce before the purchase, but it also had customers in McDonald’s, Coca-Cola, and Spotify.
