Salesforce buys Mulesoft for US$6.5 billion

Published on the 22/03/2018 | Written by Jonathan Cotton

The CRM giant pays top dollar for the integration specialist in its bid to tempt new customers…

Customer-relationship software giant Salesforce has agreed to purchase MuleSoft in a cash-and-stock deal, offering $36 in cash and 0.0711 of its own shares per each Mulesoft share, 36 percent above MuleSoft’s closing share price on Monday. The purchase of Mulesoft – a firm that helps companies connect disparate software applications, data, and devices – is the largest acquisition SalesForce has ever made, and considerably larger US$2.7 billion purchase of Demandware in mid-2016.

It’s no small amount of money but in return the Salesforce gets to add Mulesoft’s skill in developing networks that connect applications, data and devices, and API integration engine, to its arsenal. Salesforce’s growth may be slowing and the acquisition likely represents a conscious decision on the part of the company to attract new customers: With it, Mulesoft brings more than 1,200 customers, including brands like Coca-Cola, Barclays, VMware and Cisco.

“With the full power of Salesforce behind us, we have a tremendous opportunity to realize our vision of the application network even faster and at scale,” said Greg Schott, MuleSoft Chairman and CEO in the press release patter.

The deal he says will accelerate “customers’ digital transformations enabling them to unlock their data across any application or endpoint” he says.

In a statement, Salesforce CEO Marc Benioff said that the union will enable customers to connect information “throughout their enterprise across all public and private clouds and data sources…radically enhancing innovation.”

In an email to Mulesoft employees, Benioff also said that the integration of MuleSoft into Salesforce must be a “strategic priority” as it heads towards a target of US$20 billion in sales. Mulesoft made just under US$300 million in revenue last year.

The acquisition will likely squeeze out other integration-focused players in the Salesforce ecosystem as the company moves to broaden its integration capabilities and compete with apps built for a similar purpose.

“The acquisition will likely squeeze out other integration-focused players in the Salesforce ecosystem as the company competes with apps built for a similar purpose.”

“It’s also worth noting that there are other players in the Salesforce ecosystem that do the same job [as MuleSoft],” says Ben Kepes, investor and industry commentator, “Jitterbit and SnapLogic being two examples.”

Salesforce has done two things, says Kepes, deciding “that application and general integration is now a core part of the proposition and hence needs to be offered as a first-party Salesforce service”, and deciding that “Mulesoft is the horse to back”.

There is potential that such a move may reinforce a perception that “building a business off the back of Salesforce’s footprint,” says Kepes, “while a logical-enough strategy, is also one fraught with risk”.

Two things likely explain Salesforce’s motivation, says Kepes.

“Firstly, Salesforce wants to make heavy use of Mulesoft internally for its own purposes and, secondly, Salesforce, as it moves towards its US$20 billion revenue target, realizes that more and more of its prospects need application integration.”

“That’s a lucrative product proposition and it was just too tempting for Salesforce to scoop up Mulesoft to enjoy that revenue flow.”

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