Leaked documents reveal Salesforce's internal M&A plan targeting more than a dozen companies, yet Twitter, the most discussed company's acquisition target, was not even on the list.
The Wall Street Journal has shared the notorious email of one of Salesforce's (NYSE: Salesforce.com [CRM]) board members Colin Powell who was attacked by the hacktivist group DCLeaks that shared the contents of Powell's email account. The hackers got their hands on Salesforce's internal email containing a detailed presentation of the company's M&A activity, which included more than a dozen of companies. However, Twitter (NYSE: Twitter [TWTR]), the most scandalous Salesforce's acquisition target of the last weeks, was not mentioned even once.
A confidential presentation named "M&A Target Review" from last May names 14 companies that are on the company's acquisition list including Adobe Systems (NASDAQ: Adobe Systems [ADBE]), HubSpot (NYSE: HUBS), Demandware (NYSE: DWRE), LinkedIn (NYSE: LNKD), Tableau (NYSE: DATA), PegaSystems (NASDAQ: PEGA) and Marketo (NASDAQ: MKTO) among others. The presence of Adobe Systems in the list is particularly interesting as the company's current market cap of almost $54 billion is bigger that of Salesforce itself.
Even though the authenticity of the documents leaked by the hackers is always to be questioned, some names on this list make sense. For example, Salesforce CEO Marc Benioff has publicly admitted his participation in the bidding for LinkedIn some months ago, which he lost to Microsoft (NASDAQ: Microsoft Corporation [MSFT]). Demandware, another name on the list, is the company that was actually acquired by Salesforce back in June for $2.8 billion. Plus, the detailed explanation of the M&A targets in the 60-page presentation implies that the document was thoroughly discussed in the company. Earlier this month, Benioff told the Wall Street Journal that he spends about 25% of his time on M&A in 2016, what explains the company's active M&A behavior.
However, Salesforce's spokesperson tried to cut short the rumours arising from the leaked document:
“Salesforce has a disciplined and thoughtful M&A process where we routinely survey the industry landscape across a wide range of companies, but acquire very few. The presentation is a broad survey of publicly traded companies in May 2016, and the appearance of company names on the list doesn’t imply Salesforce ever intended to acquire them.”
The company has received negative feedback from its shareholders after Salesforce has lost over $5 billion on the rumours of the Twitter buyout some weeks ago. Again, the shareholders believed that a $49 billion market cap of the company is not big enough to even consider such large acquisitions like Twitter, LinkedIn or Adobe. However, earlier this week, Salesforce Chief set the rumours about buying the struggling Internet company straight this week, announcing that Salesforce removes itself from the list of Twitter's bidders.
“In this case we’ve walked away. It wasn’t the right fit for us. It’s not the right fit for us for many different reasons. You’re going to look at price, you’re going to look at culture, you’re going to look at everything,” Benioff told the Financial Times in an interview.
Upon the announcement, Salesforce shares directly increased by 5.2%, after being weighed down to its 8-year lows in the past weeks thanks to the rumours around the Twitter deal. Yet, the leaked presentation suggests that Twitter, the company that has been struggling for several quarters, was not on Benioff's target list from the beginning. Does it mean that Salesforce was not even planning on seriously participating in the race for Twitter? Some speculate that Benioff's decision to join other potential bidders for Twitter was an aftermath of his disappointment of losing LinkedIn to Microsoft. Anyway, after losing $5 billion of Salesforce's market capitalization on the rumours, Benioff made the right decision in the end, say the VentureBeat experts.
In addition to that, the leaked documents included the list of "interlopers", companies that could potentially interfere with Salesforce's acquisition plans. Among others, it included Amazon (NASDAQ: Amazon.com [AMZN]), Alibaba (NYSE: Alibaba Group Holding [BABA]), Baidu (NASDAQ: Baidu [BIDU]), Facebook (NASDAQ: Facebook [FB]), Apple (NASDAQ: Apple [AAPL]), Google (NASDAQ: Alphabet Class C [GOOG]), Hewlett Packard (NYSE: HPE), Oracle (NYSE: Oracle Corporation [ORCL]), Adobe, that somehow made its way to both lists, and, rightfully so, Microsoft.
Even though Salesforce or people familiar with the matter declined to comment on the truthfulness of the leaked documents, one thing is clear: Benioff is very active in the M&A domain this year. Salesforce has already spent more than $4 billion on acquisitions this year and continues signing new deals. For example, while struggling with the Twitter buyout rumours, Salesforce finalized the agreement to buy a data-management company Krux for $700 million.
"All I can do is one thing, which is wish my good friend Jack Dorsey well. He's the CEO of that company. It's his job to make that a great company, but it is my job to make Salesforce a great company," Benioff told CNBC.
Anyway, Salesforce continues its hunt for new M&A opportunities whereas Twitter is left with an empty list of bidders, as Salesforce was the last serious candidate after Google and Disney (NYSE: Walt Disney Company [DIS]) lost interest in buying the company.