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Salesforce Eyes Informatica to Boost Data Capabilities

(Bloomberg) — Salesforce Inc.’s Marc Benioff is pursuing what would be one of the company’s biggest-ever deals after fending off activist investors critical of his reliance on acquisitions.

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Benioff is in talks to buy Informatica Inc., according to people familiar with the matter, in a move that would add to Salesforce’s data integration and management capabilities. The companies could reach a deal as soon as within a week, said the people, who asked not to be identified because the talks were private. A final agreement could take longer than that, or the talks could still end without one, they added.

A Salesforce spokesperson said the company doesn’t comment on “rumors and speculation.” Informatica couldn’t be reached for comment. The talks were reported earlier by the Wall Street Journal.

Informatica competes against MuleSoft, Salesforce’s third-largest acquisition, Bloomberg Intelligence’s Sunil Rajgopal in a note. The deal could push further consolidation in the software-as-a-service industry and attract regulatory scrutiny, he added. The company, which helps customers manage their data in the cloud, projected in February that fiscal-year revenue would increase about 6% to $1.7 billion.

Salesforce shares fell 2.7% in premarket trading before New York exchanges opened on Monday after closing at $294.32 on Friday. Informatica, based in Redwood City, California, also declined 1.5% in early trading. The company had a market value of about $11.4 billion at the close Friday in New York. The shares have jumped 36% this year to $38.48.

Salesforce Chief Executive Officer Benioff has been grappling with activist hedge funds pressing the company to run a tighter ship. Salesforce averted a potential proxy fight with activist investor Elliott Investment Management last year, after a series of strategic changes and a rise in the stock price.

San Francisco-based Salesforce has cut costs and improved profitability over the past year. Now, the focus is on sales growth, which has slowed as corporations rein in their spending on software.

Informatica would rank as the company’s third- or perhaps second-biggest acquisition out of 117 completed and pending deals, according to data compiled by Bloomberg. Salesforce’s largest acquisition — a takeover of the business communications platform Slack Technologies for about $27 billion — was completed in 2021.

Should the Informatica deal go through with a significant premium to the current share price, the amount could rival Salesforce’s $14 billion purchase of Tableau Software in 2019, according to the data. Including debt, Informatica has an enterprise value of more than $12 billion, the data show.

Salesforce said in 2018 that its acquisition of MuleSoft represented an enterprise value of $6.5 billion.

Informatica was taken private in 2015 by private equity firm Permira and the Canada Pension Plan Investment Board in a $5.3 billion transaction. They took the company public again in 2021 with its shares priced at $29 each. The stock peaked at almost $39 two months later before sinking to near $14 last year.

Permira, with almost 47% of Informatica’s shares, remains the company’s largest stockholder, according to data compiled by Bloomberg. CPPIB owns about 29% of the shares.

(Updates with premarket trading in the fifth paragraph)

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