Salesforce to Acquire RelateIQ for $390M - Analyst Blog


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Cloud computing company ( CRM ) recently entered into a definitive agreement to acquire "relationship-intelligence" company RelateIQ Inc, for approximately $390 million.

As a result of this agreement, Salesforce will acquire all outstanding shares of RelateIQ for $350 million, and the remaining $40 million will be paid in cash.

RelateIQ is a relationship intelligence platform that combines data from email systems, calendars and smartphone calls and provides data insights on a real-time basis. Post-acquisition, RelateIQ will be a wholly-owned subsidiary of Salesforce. This acquisition provides Salesforce the platform to build its marketing intelligence system.

We believe that the acquisition will not only enhance process efficiency of both companies, but it will also make the CRM platform more competent in handling sales, marketing and service functions.

The data-mining technologies of RelateIQ will empower Salesforce to create a strong marketing platform throughout the email, social networking platform and the web. This acquisition will also boost customers' marketing efforts through email, mobile devices as well as the social media.

Salesforce has made a number of acquisitions of late, with the intention of diversifying its offerings and expanding its markets. Its strong cash balance ($879.1 million) and robust operating cash flow ($473.1 million in the third quarter of 2014) enable the company to go for strategic acquisitions.

We also remain encouraged by the rising number of deal wins at Salesforce and the rapid adoption of its cloud-based solutions. Overall, the company's diverse cloud offerings and strong spending on digital marketing remain the positives. Moreover, the company's strategic acquisitions and the resultant synergies are expected to remain long-term positives.

Although the company is growing reasonably in the cloud market, growth prospects have been tempered by competition from IBM ( IBM ), Oracle Corp. ( ORCL ) and SAP AG ( SAP ). Currency headwinds and increase in investments could pose additional challenges.

Currently, Salesforce has a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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