{"id":15487,"date":"2018-03-23T03:36:53","date_gmt":"2018-03-23T10:36:53","guid":{"rendered":"https:\/\/www.exoplatform.com\/blog\/?p=15487"},"modified":"2018-03-23T03:36:53","modified_gmt":"2018-03-23T10:36:53","slug":"cartoon-week-salesforce-acquire-mulesoft-6-5-billion-deal","status":"publish","type":"post","link":"https:\/\/www.exoplatform.com\/blog\/cartoon-week-salesforce-acquire-mulesoft-6-5-billion-deal\/","title":{"rendered":"Cartoon of the Week: Salesforce to acquire Mulesoft in $6.5 billion deal"},"content":{"rendered":"

Salesforce Inc<\/strong>. announced<\/a> this last Tuesday a definitive agreement to acquire MuleSoft Inc.<\/strong> for a whopping $6.5 billion. Because Salesforce<\/a> was, however, an investor in Mulesoft<\/strong>\u2019s Series E, F & G rounds, the net purchase price is probably much less than this amount.
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\nMuleSoft<\/strong>, a company that specializes in application programming interfaces (API), enjoyed a successful initial public offering around this time last year at $17 a share. When word first leaked that the deal with Salesforce <\/strong>was being negotiated, investors drove the price of MuleSoft<\/strong>‘s shares up 20% before trading was halted. When trading resumed, MuleSoft<\/strong> was up about 21%, resulting in a market cap of $5.21 billion.<\/p>\n

Reportedly, Salesforce<\/strong> will fund the deal with cash and about $3 billion in loans and debt issuances.<\/p>\n

Why does this deal matter?<\/h2>\n

This is the largest-ever acquisition by Salesforce<\/strong> and reveals its vision of expanding beyond its core business model, CRM.<\/p>\n

I would argue that Salesforce CRM<\/strong> is at this point a platform<\/a>. People use it everyday and its value lies in all the cloud products it integrates. Mulesoft\u2019s <\/strong>capabilities will complement the ease with which Salesforce<\/strong> integrates cloud tools.<\/p>\n

Salesforce<\/strong> already owns the PaaS provider Heroku.<\/p>\n

The acquisition expands Salesforce\u2019s <\/strong>offerings into the IaaS and Paas markets, positioning the company closer to Oracle<\/strong> and IBM<\/strong>. It is plausible that the acquisition also has to do with the rivalry between the CEOs of Oracle<\/strong> and Salesforce<\/strong>. Larry Ellison<\/strong> and Mark Benioff<\/strong> are not exactly the best of friends. They both have big egos and have often been at each other\u2019s throats.<\/p>\n

Would it be a good idea to buy stock in now in Mulesoft or Salesforce?<\/h2>\n

It would be smart to buy Mulesoft<\/strong> and short Salesforce<\/strong>. Acquisitions like this are extremely capital intensive and acquiring companies can be prone to significant losses if a deal falls through.
\nIt appears that the upside from the takeover has been fully priced into Mulesoft<\/strong> in after-hours trading, so there’s little room for additional profit.<\/p>\n

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