Salesforce stock yesterday jumped 13.5%, on a Bloomberg report that the company has hired bankers âto help it field takeover offers after being approached by a potential acquirer.â Shares have fallen back a bit this morning, but any actual buyout would still have to be in the $50 billion range.
Here are five notes on this potential blockbuster:
1. We donât know if Bloomberg is right: Iâm not suggesting that the reporters messed up on this one, but figure itâs important to lead off with a note of caution. From what I can tell, no other media organization has yet done its own independent report on Salesforce (CRM) hiring bankers, including us at Fortune. For its part, the cloud software giant is only saying that it doesnât comment on rumors or speculation (although this is a big enough report that it should deviate from such policy if the story is false). Itâs also unclear who would have incentive to leak such a thing, given that this isnât a situation where bankers need to shake the trees to find prospective buyers â there are only a handful of logical candidates.
2. But letâs assume itâs right: The most likely bank is BofA Merrill Lynch (BAC), given its history with Salesforce. Frank Quattroneâs Qatalyst is a dark horse, if only because it seems to be involved in all big-money software M&A lately.
3. Who itâs not: Bloombergâs list of mystery suitors includes Oracle, IBM and SAP. Letâs cross off that last one, both due to what sources tell us and the CEOâs recent public posture on the possibility of big M&A. IBM (IBM) also seems unlikely, given that it has just $8.8 billion of cash on hand and this total deal would be valued at around $50 billion. Oracle (ORCL) makes the most sense from a strategic perspective, and did just sell $10 billion in notes yesterday. It also would give Larry Ellison a way to avoid eventually promoting one of his two co-CEOs (Mark Hurd and Safra Catz). But weâre also hearing that the suitor wasnât Oracle â although that doesnât preclude the company from soon jumping into the fray. Finally, donât expect private equity to play here. Too big a deal, particularly in an era when PE firms donât like to âclubâ up for large transactions. In addition, Salesforce doesnât have the sort of cash-flow that PE typically seeks.
4. Who it (probably) is: Microsoft. Remember, Satya Nadella was leading Microsoftâs (MSFT) cloud business before being named CEO, and Salesforce CEO Marc Benioff has been publicly complimenting Nadella for months. Yes, this would be a massive strategic shift for Microsoft, and maybe even a geographic one. But no one else in this group has the same financial resources, nor a new CEO with a major mandate for change. Also worth noting, for whatever itâs worth, that Benioff and Nadella both were at the same private CEO event on Tuesday night, in advance of a Microsoft developers conference in San Francisco.
5. Marcâs role: Those familiar with Salesforce say it is difficult to imagine Benioff ever taking a #2 role, even at a place like Microsoft. However, they also say that Salesforce has always been willing to sell at the right price. That means one of two things could happen in a sale scenario: Either Benioff gets made CEO of a company like Oracle or IBM, or he takes a Microsoft board seat (chairmanship?) and focuses most of his efforts on philanthropy.
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