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Salesforce.com to Acquire Tableau Software
martinwolf Transaction Analysis
- Enterprise Value: 14.5B
- EV/Sales: 12.2X
- EV/EBIDTA: N/A
- Cloud-based software company Salesforce.com Inc (NYSE: CRM) announced early today its plan to acquire data firm Tableau Software Inc (NYSE: DATA) in an all-stock transaction in which shares of Tableau Class A and Class B common stock will be exchanged for 1.103 shares of Salesforce common stock, representing a 42 percent premium over Friday’s closing price.
- This is Salesforce’s biggest acquisition. Tableau has more than 86,000 customers and will merge its platform with Salesforce’s Customer 360 platform.
- The transaction is expected to increase Salesforce’s FY20 total revenue by approximately $350 million to $400 million, an increase of 24 to 25 percent. It is expected to decrease fiscal 2020 non-GAAP EPS by 37 cents to 39 cents.
- Shares of Tableau closed up 35 percent, while shares of Salesforce closed down 2 percent.
- The transaction is expected to close in Q3 2019 subject to customary closing conditions.
- Extending Its Engagement: Salesforce’s acquisition of Tableau helps extend its engagement and data intelligence for Salesforce customers and allows the company to bulk up its analytics visualization strategy and reach to new customers. Tableau’s integration with Salesforce 360 will provide new capabilities to existing and new customers and will enable organizations to improve data-driven decisions with new interactive and visual analytics platforms.
- Building Customer Stickiness: Tableau’s Q1 2019 financial results showed momentum in its subscriptions, with a 41 percent increase year-over-year which president Adam Selipsky attributed to the ease and flexibility of Tableau’s end-to-end platform. This customer stickiness indicates confidence in its services. Salesforce’s acquisition capitalizes on this customer confidence and shows its commitment to its own customers and platform by its ability to forecast and adapt its service offerings with in-demand technology and data platforms.
- Confidence in the Markets it Serves: Salesforce is putting money where the company’s mouth is. The company isn’t buying back shares or sitting on cash, it’s investing in its business. They think the timing is right to make a big bet. Most importantly, they are diluting current shareholders by buying a company with no current EBITDA and exchanging shares. That is a sign where the enterprise SaaS market may be headed, and that is bullish.
For more information about this transaction, click here to read the press release.
*Financial information from Factset. EV/EBIDTA is not available as target EBIDTA is negative.
martinwolf was not the advisor in this transaction.