The anticipated acquisition talks between Salesforce and Informatica have come to an impasse, as the companies were unable to reach an agreement on terms, according to sources familiar with the matter. This development follows reports earlier in the month by The Wall Street Journal, which suggested that Salesforce was in discussions to acquire Informatica, a data-management software firm based in Redwood City, California. The potential deal was speculated to be valued at around $10 billion, which would have marked one of Salesforce’s largest acquisitions to date.
However, news of the potential acquisition caused significant market reactions. Salesforce’s shares experienced a sharp decline, dropping 7.3% on the first trading day following the report. This decline in Salesforce’s stock erased more market value than the potential deal was estimated to be worth, considering Salesforce’s market capitalization of approximately $262 billion. Similarly, shares of Informatica also saw a notable decrease, falling more than 6.5% on the same day. This decline occurred despite Informatica’s stock having climbed 43% year-to-date prior to the reports of the acquisition talks.
The reported discussions between Salesforce and Informatica centered around a potential price for Informatica’s shares in the mid-$30s range, which was approximately where the stock closed on the Friday following the reports. At the time of the initial report, Informatica’s stock had been trading at $38.48.
Salesforce, known for its robust acquisition strategy, had already faced challenges related to its approach to mergers and acquisitions. Over the past year, the company encountered pressure from activist investors, prompting a reevaluation of its acquisition strategy and a shift towards improving profitability. This shift was evidenced by the dissolution of a committee focused on M&A activities and a renewed emphasis on enhancing profitability.
Salesforce, headquartered in San Francisco, specializes in cloud-based software solutions designed to assist sales teams in managing customer relationships. On the other hand, Informatica provides data management solutions to help organizations analyze data collected across cloud and on-premise systems. Its clientele includes prominent companies such as Unilever, Toyota, and Deloitte.
Informatica was taken private by private-equity firm Permira and the Canadian Pension Plan Investment Board in 2015 in a transaction valued at $5.3 billion. It later went public again in 2021. A potential acquisition by Salesforce would have represented its largest deal since the acquisition of Slack Technologies for approximately $28 billion in 2021.
Overall, while dealmaking activity in the U.S. has shown signs of strength, factors such as persistent inflation pressures and the upcoming election year have contributed to a cautious approach among potential buyers. Additionally, exits for private-equity firms have become more challenging, further influencing market dynamics and deal negotiations.
