Technological honcho IBM (IBM, Financial) has been growing its Cloud revenue which was reflected even in the latest quarter numbers and the company has announced that it would go for viable acquisitions to improve its position in the cloud computing space. Salesforce (CRM, Financial) which has a market capitalization of about $44 billion has spent over $4 billion in the last four years on acquisitions like ExactTarget, BuddyMedia and Cloud software development firm Heroku. As IBM is expanding its offerings on the Cloud, Salesforce does seem to be its soft target for acquisition. Besides IBM, there are other companies that could bid for Salesforce in the long run. In fact, on April 29, shares of San Francisco-based Salesforce surged 13.5% in afternoon trading after a Bloomberg report stated that the company had hired investment advisors to field the “takeover offers.”
Let’s take a sneak peek into what the news sources are stating with respect to the viable bidders for Salesforce and its cloud offerings.
The tech companies on an expansion move
It is being largely suggested that Salesforce might be acquired by Oracle (ORCL, Financial) in the long run as the Cloud business is growing at a faster rate than other legacy software, thereby initiating a bidding war among tech rivals. In an email, Daniel Ivas, an analyst with FBR Capital Markets, noted, “We would view Oracle as the most likely acquirer that makes sense on paper and strategically speaking… Oracle was late to the game on the cloud and we believe would have to make a game-changing acquisition. Salesforce would fit like a glove in our opinion…”
However, there are other companies who would like to takeover Salesforce and make huge strides in the cloud computing space –Â among such companies the most likely to approach such an acquisition mode could be IBM, Microsoft (MSFT, Financial) or Hewlett Packard (HPQ, Financial), all of which are investing in growing their Cloud business and have their own CRM offerings. Let’s find out what are the possibilities of Salesforce joining hands with IBM to merge its offerings with that of the acquirer.
Joining the league of IBM
IBM’s CEO Ginni Rometty has been trying hard to rebuild Big Blue around the cloud, by investing billions of dollars in adding cloud computing services and software. In fact, it would not be wrong to think that Salesforce’s offerings could be combined with those of the Big Blue as there’s not muc of an overlap in the applications.
It is notable that Salesforce is presently a true contender of IBM in the cloud space after it came out with the CRM software. Presently, Salesforce competes with IBM, Oracle, SAP and Microsoft. If it gets acquired by IBM, the combined entity could claim about 20% market share of the $20 billion CRM software market.
Since Salesforce has a strong portfolio of Cloud software assets that it has acquired over the last four years by spending on acquisitions, IBM could find it an attractive option which could aid in reinventing itself in the cloud computing domain amid intense competition.
Last word
The story of Salesforce seems to be just the beginning of a new chapter for the company though its management has not commented to the market rumors. However, it remains to be seen how its loyal customer base reacts to the news if it’s confirmed from the management’s end. Till date, Salesforce does appear as a possible target for tech giants with Oracle and IBM leading the acquisition race.
