What’s Going On Here?

Silicon Valley software Salesforce announced a $16 billion acquisition of data analytics firm Tableau – its biggest purchase to date.

What Does This Mean?

Data is king

• Salesforce’s software is focused on customer relationship management;
• Tableau brings fresh analytics to the table – helping Salesforce customers (like Netflix & Southwest Airlines) to better understand the data.

Shareholders side

• Salesforce is paying Tableau’s shareholders entirely in shares – no cash is changing hands, though Tableau’s investors can sell their stock if they want to cash out
• Thanks to Salesforce’s other cloud-based additions, the company’s $20 billion revenue target, may well be accompanied by greater share price-boosting profit.

Why Should I Care?

For markets: Tech companies are adding practical details.

• Tableau’s stock rose on Monday – the deal values it 42% higher than the company’s price on Friday.
• Salesforce’s stock, however, fell 4%: a large purchase (even without cash) comes with risk. Salesforce likely hopes its acquisition will help it keep pace with rivals offering ever more services.
• Competitors: Last week,
  • Google bought a data analytics startup for $3 billion;
  • Microsoft snapped up LinkedIn in 2016 (which Salesforce also had its eye on);
  • Github last year, and is now teaming up with Adobe to compete with… Salesforce;
  • Hardworking IBM bought Red Hat last year in 2018’s biggest tech deal.

The bigger picture: United we stand.

• Late on Sunday, another US conglomerate, United Technologies (making aircraft and jet engines) – announced plans to unite with defense contractor Raytheon, creating the world’s second-biggest aerospace and defense company.
• Boeing’s currently number one, but its recent turbulence might allow rivals to swoop in. Aerospace and defense companies typically rely on government contracts – and with recession worries abound, Uncle Sam might tighten the purse strings.
• Potential synergies from the merger could help “Uni-theon” weather a forthcoming storm.

Content source: Finimize. (2019) Salesforce Gains Force. Available from: https://www.finimize.com/wp/news/salesforce-gains-force [Accessed 16 June 2019]