M&A News: Salesforce (CRM) Acquires Informatica for $8B in AI Data Push
Salesforce (CRM) announced on Tuesday that it will acquire cloud data management company Informatica (INFA) in an $8 billion deal, aiming to strengthen its efforts in AI (artificial intelligence). Following the announcement, CRM stock gained 0.68% in pre-market trading, while INFA surged almost 6%.
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Notably, the acquisition news comes just ahead of Salesforce's fiscal Q1 earnings report, scheduled for May 28.
Salesforce Goes Deeper into Data
The acquisition of Informatica is a strategic move by Salesforce to expand its data management capabilities as it accelerates its focus on AI-powered solutions. Integrating Informatica will give Salesforce greater control over how enterprise data is structured and utilized.
CEO Marc Benioff emphasized that the deal will strengthen Salesforce's foothold in the more than $150 billion enterprise data market.
Meanwhile, analysts at Scotiabank noted that the acquisition could help Salesforce close the gap with its rivals, as many large software companies now offer data management tools bundled together with their other products. As a result, Salesforce needed to enhance its data management capabilities to stay competitive and keep up with the trends in the software market.
More Details About the Acquisition
As part of the agreement, Salesforce is offering $25 per share for Informatica, representing a roughly 30% premium over the stock's closing price on May 22, just before news of renewed talks surfaced.
Salesforce announced the acquisition will be funded through a combination of cash on hand and newly issued debt. The company expects to complete the deal early in the next fiscal year, beginning in February and anticipates that the acquisition will improve its operating margin starting from the second year after closing.
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CRM stock based on 21 Buys, seven Holds, and two Sells assigned in the past three months. The average CRM price target of $346.63 per share implies a 27% upside potential.
Year-to-date, CRM stock has declined by 18.3%.
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