Inc. (CRM), the largest maker of online customer-management software, agreed to buy ExactTarget Inc. (ET) for about $2.5 billion, making its biggest acquisition ever to further an expansion into social marketing.
The offer for $33.75 per share in cash is 53 percent more that ExactTarget’s closing price yesterday. The transaction has been unanimously approved by the boards of directors of both companies, according to a statement today.
Salesforce Chief Executive Officer Marc Benioff has spent at least $4 billion over five years on more than 40 deals, including ExactTarget as well as social-media marketing firms Buddy Media Inc. and Radian6 Technologies Inc. Benioff’s push into marketing software has been slow to take hold, Brent Thill, an analyst at UBS AG, said last month, when San Francisco-based Salesforce forecast quarterly profit and sales that missed analysts’ estimates.
“We couldn’t just keep making these small acquisitions -- that strategy was taking, honestly, too long,” Benioff said today on a conference call. Now, Benioff said that he plans to take a break from doing deals for the next 12 to 18 months.
Salesforce fell 3.5 percent to $39.61 at 9:53 a.m. in New York. The stock had dropped 2.4 percent this year through yesterday, while the Standard & Poor’s 500 Index gained 15 percent. ExactTarget advanced 53 percent to $33.74.
Mobile Marketing
ExactTarget’s e-mail, mobile and social-media marketing technologies are drawing customers at a time when traditional means of reaching consumers -- newspaper, television and radio advertisements -- are becoming less effective.
By 2015, consumer technology businesses will have switched one-third of their traditional marketing budgets online, Salesforce said in the statement, citing market researcher Gartner Inc. ExactTarget’s customers include Microsoft Corp. and Toyota Motor Corp., according to the company’s website.
Founded in 2000, ExactTarget provides software that companies use to customize e-mails and social-media advertisements according to user preferences, which are tracked through clicks. The company had its trading debut in March 2012, after scrapping its previous plan to go public in 2009 amid the financial crisis.
While ExactTarget hasn’t reported a profit since 2008 and is forecast to post losses this year and next, the company’s revenue has increased every year since at least 2007, data compiled by Bloomberg show.
‘Huge Hole’
“This is an excellent move and fit for Salesforce.com, and we consider the price paid reasonable given ExactTarget’s leading market position and growth profile,” Nathan Schneiderman, an analyst at Roth Capital Partners, wrote in a research report today. He has a buy rating on the shares.
ExactTarget gets 80 percent of total revenue from e-mail, filling a “huge hole” in Salesforce’s current offerings, he added.
Salesforce’s purchase of ExactTarget would be the biggest e-marketing takeover since 2008, when Google Inc. completed its acquisition of DoubleClick Inc., according to data compiled by Bloomberg. Salesforce is paying about 7.6 times revenue, compared with the median of 1.9 times revenue in a survey of more than 70 similar deals, the data show.
The ExactTarget purchase will reduce fiscal second-quarter earnings by 5 cents a share, excluding some items, Salesforce said.
Bank of America Corp. advised Salesforce, while JPMorgan Chase & Co. provided financial guidance to ExactTarget.
SAP AG (SAP), the biggest maker of business-management software, considered buying ExactTarget and then decided not to proceed, according to a person familiar with the matter who asked not to be named because the process was private. An SAP representative declined to comment.
To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Scott Moritz in New York atsmoritz6@bloomberg.net
No comments:
Post a Comment