Salesforce Eyes Major Acquisition Of Informatica, May Face Pricing Challenges Amid Stock Surge: Report – Informatica (NYSE:INFA), Salesforce (NYSE:CRM)

Salesforce, Inc. (NYSE:CRM) is reportedly in advanced negotiations to acquire Informatica Inc. (NYSE:INFA), a data-management software provider.

A potential complicating factor is that the discussed price for the acquisition is lower than Informatica’s recent closing stock price of $38.48, which experienced a significant increase, reported The Wall Street Journal.

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While the Wall Street Journal has not discussed the funding details, Salesforce said, while reporting fourth-quarter results, that it had $8.472 billion in cash and equivalents as of Jan. 31.

Informatica specializes in aiding companies with data management across both cloud-based and on-premise systems, enabling organizations to effectively analyze the data they accumulate, the report read. 

Its clientele includes a diverse range of companies such as Unilever, Toyota, and Deloitte, as listed on its website.

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Informatica recently introduced new tools that build upon its artificial intelligence capabilities, coinciding with the surge of interest in AI across the tech industry. 

One notable addition is Claire GPT, a generative AI tool aimed at assisting companies in managing their data more effectively, The Wall Street Journal stated.

Salesforce has a well-established track record of being highly acquisitive, with over 70 acquisitions completed since 2006, according to data from FactSet, The Wall Street Journal added.

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A potential acquisition of Informatica by Salesforce would be one of its largest deals to date, following the latter’s approximately $28 billion acquisition of workplace collaboration products company Slack Technologies in 2021, which stands as Salesforce’s largest acquisition ever. 

Prior to that, Salesforce had agreed to acquire data analytics platform Tableau Software for more than $15 billion, further demonstrating its willingness to invest significantly in strategic acquisitions.

Last year, Salesforce’s approach to dealmaking attracted the attention of at least five activist investors, including Elliott Investment Management and Starboard Value. 

In response to pressure from these activists, Salesforce announced several measures aimed at appeasing them. 

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This included disbanding a committee dedicated to mergers and acquisitions (M&A), and shifting its focus towards enhancing profitability and operational efficiency. Additionally, Salesforce appointed Mason Morfit, the chief executive of ValueAct Capital, along with two other new members, to its board of directors.

Elliott had been preparing for a potential proxy battle but opted to step back, after Salesforce revealed plans for cost reductions and increased share buybacks, among other initiatives.

This, coupled with the promise of AI enhancing its product portfolio, has fueled a significant rebound in Salesforce’s stock since late 2022. 

The company has seen a further increase of approximately 15% in its stock value so far this year, pushing Salesforce’s market capitalization to around $285 billion.

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Price Action: CRM shares closed lower by 1.61% to $294.32 on Friday; shares traded lower by 0.24% after hours. INFA shares closed lower by 0.85% to $38.48 on Friday; shares gained by 3.07% to $39.65 after hours.

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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