SALESFORCE ADDING ON – Buying Tableau. By Todd Horwitz, Bubba Trading.

 

In 2004, when Tableau Software was a still a tiny spinout from Stanford University, the co-founders fell in love with Seattle and decided to build their data visualization software company here rather than in the San Francisco Bay Area. On Monday, the Bay came calling in the form of Marc Benioff’s San Francisco-based Salesforce, which agreed to a $15.7 billion all-stock purchase of Tableau, the second-largest acquisition of a Washington company.“

With Tableau, Seattle will become our second headquarters of Salesforce. That’s going to be our HQ2, if you will,” Benioff said, speaking to financial analysts on a conference call. That reference to HQ2 — an abbreviation made famous by Seattle-based Amazon in its search for a second headquarters — suggests the role Benioff imagines for Salesforce in the region. It already has more than 1,000 employees of its own here, and Benioff said he’s long wanted to make the Seattle area “a strategic part of Salesforce.” As for Tableau, he said, “We’re going to plan to put that thing on overdrive.”

Salesforce is paying a 42% premium over Tableau’s closing share price on Friday, indicating an urgency to both defend and extend its turf. The acquisition is the fourth-largest technology deal globally this year, according to Dealogic data, behind a trio of financial-technology deals. While Salesforce is the world’s biggest seller of so-called customer relationship management software, competitors including Microsoft Corp. and Adobe Inc. have gained ground in recent years. Salesforce has around a 20% market share, according to International Data Corp.

“Microsoft is making gains overall in the market, and this is a way for them to strike back,” said Steve Koenig, an analyst at Wedbush Securities. “It extends their rivalry from [customer-relationship management] to the heart of the analytics market.”Salesforce investors reacted negatively to the deal on Monday, sending the company’s shares down 5.2% to $152.79, after they had risen 12% for the year. Analysts said the fall reflected concerns about the price Salesforce paid and share dilution as a result of the all-stock purchase. Shares of Tableau jumped 33% to $167.41, putting them up 40% for the year.

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.