Yesterday, Bloomberg broke the news that Salesforce.com have hired advisers to evaluate a potential takeover offer. The news spread incredibly rapidly and the CRM stock had to be halted due to volatility. When trading resumed, the stock was up 10% trading at an all time high.
As media outlets started speculating about the potential Salesforce.com acquirers, there was a consensus that only IBM, Google, Oracle, Microsoft and SAP have the sufficient market cap and cash to afford what could be considered the second highest technology acquisition of all times. However, as we start analyzing each potential acquirer, we quickly realize that the list of smaller than we think.
Let’s take a look:
- Pros: Microsoft seems to have over $95B in cash that could be deployed into M&A activity. The Redmon company has established a strong relationship with Salesforce.com on the CRM side and an acquisition can help immediately help their Office365 and business suites. Other components of the Salesforce.com platform like the social analytics and marketing platform can also be a great fit for Microsoft’s portfolio.
- Cons: While the Salesforce.com CRM suite seems to be a great fit for Microsoft, we can’t say the same about the the rest of the platform. Specifically, there is a strong competition between the Salesforce1/Heroku and Azure platforms which will be hard to reconcile. Additionally, keep in mind that Azure and Salesforce1 have been built in different technology stacks. Finally, a takeover offer doesn’t seem to be the style of the Satya Nadella and the current Microsoft board.
- Pros: Acquiring Salesforce.com will represent a string accelerator toi IBM’s SaaS business. Also the Salesforce1 platform fits nicely with IBM’s aggressive investments in the mobile and IOT spaces.
- Cons: With only about $9B in cash, IBM doesn’t seem to have enough liquidity to embark in such an aggressive acquisition. Also, similar to Microsoft, IBM is heavily invested in their cloud platform which presents some serious overlap with the Salesforce1/Heroku stacks.
- Pros:com can be a very strong and necessary addition to Google’s enterprise business. Additionally, Salesforce1/Heroku can help to expand Google Cloud’s capability set which is still trailing competitors like AWS or Azure.
- Cons: Acquiring Salesforce.com will be a strong shift from Google’s current trajectory making it’s enterprise business one of the most relevant business units of the entire company. Also, a hostile takeover doesn’t seem align with Google’s culture.
- Pros: SAP has embarked in an ambitious effort to modernize its existing business suite. Acquiring Salesforce.com could be the accelerator needed to effectively execute on those plans. The marketing and analytics suite seemed to be a perfect fit for SAP. Also, the Salesforce1/Heroku platforms can really help SAP’s struggling cloud business.
- Cons: SAP seems to only have about $5B on hard which will require the German giant to take on some debt to pursue the acquisition.
- Pros: Oracle seems to be a great candidate to acquire Salesforce.com. The CRM and business platform can really simplify and help Oracle’s chaotic SaaS business. Salesforce1/Heroku can be a great fit for Oracle’s Cloud stack which is lagging competitors like IBM, AWS and Azure. Also, don’t forget that Salesforce.com leverages a lot of Oracle technology which will make the technical integration slightly less challenging. Finally the existing relationship between Benioff and Larry Ellison should not be ignored.
- Cons: Oracle has reported to have around $14B in cash and another $30B in securities. In that sense, Oracle will have to assume some heavy debt to pursue the acquisition.
I hope the previous analysis makes sense. In addition to the previous list, Amazon, Alibaba and EMC could also be considered as potential acquirer although not at the same level of the ones included previous list. Is that enough for speculation? What do you think?