Salesforce’s Talks to Buy Informatica Fizzle
Deal for data-management software firm would have ranked among Salesforce’s largest
Talks between Salesforce CRM -0.57%decrease; red down pointing triangle and data-management software firm Informatica have fizzled after the companies couldn’t agree on terms, according to people familiar with the matter.
The Wall Street Journal reported earlier this month that Salesforce was discussing a deal to buy Redwood City, Calif.-based Informatica, which could have been valued in the neighborhood of $10 billion. It would have ranked among Salesforce’s largest acquisitions.
After the April 12 report, Salesforce shares traded sharply lower. Salesforce stock fell 7.3% the first trading day after the story ran, erasing more market value than the deal would likely have been worth. Salesforce has a market capitalization of about $262 billion.
Shares of Informatica also fell sharply, down more than 6.5% that day. Informatica stock had climbed 43% year-to-date, racing ahead of the price Salesforce had been planning to pay.
Salesforce had been discussing a price for Informatica in the mid-$30s a share, about where the stock closed Friday. At the time of the report, it had been trading at $38.48.
Salesforce, which has historically had a voracious appetite for deals, had already been on a tight leash after a shareholder rebellion over its acquisition strategy, among other things.
A swarm of at least five activist investors descended on the company this past year. To appease the activists, Salesforce disbanded a committee focused on M&A and shifted its focus toward improving profitability.
San Francisco-based Salesforce specializes in cloud-based software that helps sales staff manage customer relationships.
Informatica helps companies manage their data across cloud and on-premise systems, allowing organizations to better analyze the data they collect. It counts companies ranging from Unilever to Toyota and Deloitte as customers.
Private-equity firm Permira and the Canadian Pension Plan Investment Board in 2015 took Informatica private in a transaction valued at $5.3 billion after roughly 15 years as a public company. The business went public again in 2021.
A deal for Informatica would have ranked as Salesforce’s biggest since it closed the roughly $28 billion acquisition of workplace-collaboration products company Slack Technologies in 2021. (That was Salesforce’s biggest acquisition ever.)
Dealmaking in the U.S. is off to a stronger start this year, but there are still factors keeping buyers on the sidelines. Stubborn inflation pressures persisted in March, derailing the case for the Federal Reserve to begin reducing interest rates soon. It is also an election year, giving some buyers pause to pursue big transactions.
Exits for private-equity firms are also harder to come by, at a time when investors in investment firms are increasingly asking for money back.