Salesforce to Buy Demandware in $2.8 Billion Deal
Here we go again. On Wednesday, Salesforce announced plans to buy e-commerce specialist Demandware in a $75 per share cash deal worth $2.8 billion.
This deal, the largest in Salesforce’s history, is the latest in a long succession of mega deals whereby Salesforce and rivals Oracle, SAP, and others are consolidating retail and marketing software power under one roof.
Over the past few years Salesforce (CRM) has purchased ExactTarget, (for $2.5 billion) in 2013, while Oracle (ORCL) acquired Eloqua for about $810 million in 2012 and ATG in 2010 for about $1 billion, and SAP (SAP) snapped up Hybris for about $1 billion in 2013.
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In a prepared statement, Salesforce chief executive Marc Benioff lauded Demandware, which claims customers including L’Oreal and Land’s End, as a “multi-billion e-commerce power.” He added: “With Demandware, Salesforce will be well positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion dollar cloud.”
Demandware’s expertise will help Salesforce attack what it calls a huge market as more retailers turn to e-commerce to sell more stuff. The press release cited Gartner estimates that spending on e-commerce technology will grow 14% annually to hit $8.5 billion by 2020.
On the conference call, Salesforce president Keith Block said Demandware will be the foundation of yet another business unit or “cloud.” The new e-commerce cloud will join Salesforce’s existing Sales, Marketing, Service, and upcoming Internet of things (IoT) clouds.
Addressing the deal during an appearance on CBS This Morning, Benioff said the addition of Demandware will “let every one of our customers become an Amazon (AMZN),” referring to the e-commerce behemoth. That was interesting since Salesforce last week said it planned to move more of its infrastructure Amazon Web Services. With the exception of its Heroku and a few other businesses, Salesforce runs mostly on its own infrastructure currently.
The deal is expected to close in the second quarter.
This story was updated with details from the Salesforce and Demandware conference call and Benioff’s remarks on CBS This Morning.