Salesforce to Acquire Tableau in All-Stock Deal Worth $15.7B
Companies hope to “supercharge” the digital transformations of their customers.
CRM and analytics provider Salesforce (NYSE: CRM) announced yesterday that it has signed a definitive agreement to acquire analytics platform Tableau Software (NYSE: DATA) in an all-stock transaction. Each share of Tableau Class A and B common stock will be exchanged for 1.103 shares of Salesforce common stock, in a deal worth an estimated $15.7 billion (net of cash), based on an average share price for Salesforce stock as of June 7, 2019.
Both boards of directors have approved the deal, but regulators must also approve the acquisition. The technology companies say they are combining to “supercharge” the digital transformations of their customers in what is estimated will be a $1.8 trillion industry by 2022.
The acquisition is expected to be tax free for Tableau shareholders, except for cash received for fractional shares. Salesforce plans to acquire all of Tableau’s outstanding shares, and the sale is expected to close in Salesforce’s third fiscal quarter which ends October 31, 2019. Majority stockholders – Christian Chabot, Patrick Hanrahan and Christopher Stolte, who are Tableau’s founders, have agreed to tender their shares as part of the deal.
“We are bringing together the world's #1 CRM with the #1 analytics platform,” said Marc Benioff, chairman and co-CEO of Salesforce, in a news release yesterday. “Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It's truly the best of both worlds for our customers – bringing together two critical platforms that every customer needs to understand their world. I'm thrilled to welcome Adam and his team to Salesforce.”
Keith Block, co-CEO of Salesforce, also commented on the deal.
“Salesforce's incredible success has always been based on anticipating the needs of our customers and providing them the solutions they need to grow their businesses. Data is the foundation of every digital transformation, and the addition of Tableau will accelerate our ability to deliver customer success by enabling a truly unified and powerful view across all of a customer's data,” said Block.
Tableau has more than 86,000 customers of all sizes around the world, including Charles Schwab, Verizon, Chipotle, Lufthansa, Honeywell, Hello Fresh, Netflix and PEMCO Insurance. Tableau, which will continue to operate independently under the Tableau name, will keep its headquarters in Seattle and will continue to be led by president and CEO Adam Selipsky and his leadership team.
“Joining forces with Salesforce will enhance our ability to help people everywhere see and understand data,” said Selipsky. “As part of the world's #1 CRM company, Tableau's intuitive and powerful analytics will enable millions more people to discover actionable insights across their entire organizations. I'm delighted that our companies share very similar cultures and a relentless focus on customer success. I look forward to working together in support of our customers and communities."
Salesforce provided the following estimated financial impact to the company as a result of the acquisition:
- An increase in revenue of $350 million to $400 million for fiscal year 2020
- Fiscal year 2020 revenue is now estimated to range between $16.45 billion and $16.65 billion, an increase of 24% to 25% year-over-year.
- The acquisition will decrease Salesforce’s non-GAAP operating margin for fiscal year 2020 by approximately 75 basis points year-over-year.
- Operating cash flow for fiscal year 2020 will range between 21% and 22% year-over-year.
- The deal will lower non-GAAP diluted earnings per share between $0.37 and $0.39. Adjusted non-GAAP earnings per share will now range between $2.51 and $2.53, based on 900 million shares.
In a similar but unrelated deal, last week Google announced it would acquire Looker, an analytics startup, for $2.6 billion in an all-cash deal. Google will add Looker to the Google Cloud. This isn’t an entirely new relationship, says TechCrunch. Google and Looker had a partnership prior to the deal, along with 350 mutual customers, including Buzzfeed, Hearst and Yahoo.
“For any business that is looking for a partner to help drive digital transformation, the combination of Google Cloud and Looker will offer an incredible data management and analytics platform. We’re thrilled to bring more robust data management solutions to our customers and look forward to welcoming the Looker team to Google Cloud,” said Thomas Kurian, CEO of Google Cloud in a June 6 blog post announcing the acquisition.
Digital transformation is the name of the game for any business, nonprofit or government agency today. They must all find new, better ways of managing and analyzing their data or get left behind as their competitors surpass them. Companies like Salesforce and Tableau are smart to combine forces to offer technology customers a wider range of products and services to help assist in necessary digital transformation. With Salesforce’s CRM capabilities, Tableau’s analytics and data visualization tools and the combined customer bases, the companies are much stronger together than either is alone.