The growth through acquisition continues for
). The company has recently entered into a definitive agreement
to acquire the cloud marketing company, ExactTarget for
approximately $2.5 billion.
As a result of this agreement, Salesforce.com will be making a
purchase offer for all the shares of ExactTarget for $33.75 per
share in cash. This transaction has already secured the approval
of the board of directors of the companies concerned.
The news of the acquisition improved the share price of Excat
Target by 53% above the closing price of $22.10, that the company
witnessed this Monday, and reached a level of $33.70 when the
trading day ended on Tuesday. We believe this is an expensive
acquisition by Salesforce, as a result the dipped by 3.5% in
Tuesday's early trade.
The acquisition will add value to Salesforce's existing
portfolio. Not only will this acquisition enhance the process
efficiency of both the companies, but it will also make the CRM
platform more efficient in handling the sales, marketing and
service function efficiently.
The digital marketing capability of ExactTarget will empower
Salesforce to create a strong marketing platform throughout the
email, social networking platform and the web. This acquisition
boosts customers marketing effort through different medium such
as email, mobile devices as well as the social media.
So, this acquisition will make it easy for Salesforce.com to
tap the online marketing business. This is the largest
acquisition that the company has made till date, and the eighth
consecutive acquisition over a period of one year.
The deal got the approval of the board of both the companies
and is expected to complete during the July quarter. Moreover,
the ExactTarget acquisition will give Salesforce access to some
6000 customers of Buddy Media, which includes names like
Nike Inc. (
About a year ago, Salesforce completed the acquisition of
Buddy Media, which strengthened the company's social media
Moreover, the company continues to win deals across its
geographical reach as acquisitions have made it capable of
offering new products and services. Overall, the company's
diverse cloud offerings and better IT spending prospects
(according to Gartner) are positives.
Although the revenue for the company has increased, but the
operating efficiency of the company declined as the company could
not manage its expenses well. This apart, the growth prospects of
Salesforce have been rationalized to a considerable extent by the
renewed focus of tech giants, such as
), in the cloud space.
In addition to this, the continued weakness in Europe, the
economic challenges in Japan as well as the stiff competition
offered by its peers keep us concerned.
Salesforce carries a Zacks Rank #3 (Hold).
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