Salesforce Stock Soars on Takeover Talk Centering on Oracle

30 Apr 2015 | Author: | No comments yet »

Salesforce Said to Work With Bankers to Field Inquiries.

SAN FRANCISCO (AP) — Investors are betting that business software service company will be sold, with Oracle Corp. emerging as the early favorite to pull off a deal that could cost about $50 billion. Inc. is working with financial advisers to help it field takeover offers after being approached by a potential acquirer, people with knowledge of the matter said. If it were to happen, an Oracle acquisition of Salesforce would likely be the most expensive ever for a software maker and reunite two of Silicon Valley’s most colorful characters. The relationship resulted in Ellison putting up $2 million to become one of Salesforce’s initial investors, though he later was ousted from the company’s board when Benioff discovered his former boss had secretly been building a competing product. A takeover of Salesforce, which had a market value of nearly $44 billion as of Monday’s close, would be the largest ever of a software company, data compiled by Bloomberg show.

Benioff, though, retained the flamboyant Ellison’s flair for showmanship while emerging as an outspoken evangelist for “cloud computing” — the concept of making software applications available on any device with an Internet connection instead of licensing programs to be installed on the disk drives of individual computers. While all those companies have their own customer relationship management technologies, they trail Salesforce’s products in market share, according to an annual ranking that researcher Gartner Inc. published last May. Ellison originally dismissed cloud computing as a passing fancy, but Oracle is now scrambling to expand in the field as more customers defect to subscription services run by Salesforce and other up-and-coming rivals such as Workday Inc.

Oracle is the most “realistic buyer,” Daniel Ives, an analyst at FBR & Co. wrote in a research note Wednesday. “Oracle is desperate to establish itself as a leader in the cloud, and acquiring the leading cloud company and bringing on board a visionary leader in Marc Benioff would help toward accomplishing this goal,” he wrote, referring to Salesforce’s chief executive. Microsoft and Adobe Systems Inc. teamed up Wednesday to offer their mutual customers a mixture of customer resource management and marketing products — something that customers could get solely from Salesforce.

Since Salesforce made its acquisition of marketing firm ExactTarget Inc. for $2.42 billion in mid-2013, Oracle has bought a number of marketing companies, including Responsys for $1.44 billion and Blue Kai Inc. “The company is not under duress, they wouldn’t be a seller under duress,” said Steven R. Ellison, who stepped down as Oracle’s CEO last year, has engineered dozens of acquisitions during the past decade, including two major deals for companies run by two of his former subordinates.

Oracle paid about $11 billion to buy PeopleSoft, whose CEO was former Oracle executive Craig Conway, and about $6 billion for Siebel, whose CEO and founder, Tom Siebel, had also defected from Oracle. Nicola Leske, a spokeswoman for SAP, referred to comments by SAP Chief Executive Officer Bill McDermott, who has said that the company is done making big acquisitions.

Larry Ellison, the company’s founder and chief technology officer, said in March that Oracle expects to earn more money from cloud-based systems than Salesforce by the end of this calendar year.

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