Salesforce is Buying MuleSoft for $6.5 billion

Awards InternationalMarch 21, 20186min0
MuleSoft shares were up 5 percent in extended trading after rising 27 percent during the day. Salesforce shares were down more than 2 percent after the bell.

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Salesforce has announced their intention of buying MuleSoft, and the deal is valued at $6.5 billion! Even though it’s not an official selling price (still not public) but a value based on stocks, bonds, and cash, it’s still a huge amount. What we managed to hear is a price of $44.89 per share.

Mulesoft has confirmed this yesterday

Rumors began surging this morning after a story broke by Reuters that the CRM giant was showing interest in MuleSoft, which launched in 2006 and went public almost exactly a year ago. With 1,200 customers, it gives Salesforce a mature company to add to its arsenal. It also gives them an API integration engine that should help the company access data across organizations, regardless of where it lives.

This is especially important for Salesforce, which tends to come in and work with a company across enterprise systems. As it builds out its artificial intelligence and machine learning layer, branded as Einstein, it needs access to data across the company. A company like MuleSoft gives them that.

But of course, Salesforce gets more than the tech with this purchase, which it can integrate into its growing family of products. It also gets major customers like Coca-Cola, VMware, GE, Accenture, Airbus, AT&T, and Cisco. While Salesforce may have a presence in some of these companies already, MuleSoft gives them entrée into areas they might not have had and gives them the ability to expand that presence.

What’s more, the business has big revenue goals. Having reached $10 billion in revenue faster than any software company ever has, a point that chairman and co-founder Marc Benioff has been pleased to make, they have actually set their sights on $60 billion by 2034. That’s a long way away, of course, but having a company like MuleSoft in the fold, which made almost $300 million in revenue in fiscal 2017, will certainly help.

Ray Wang, founder and principal analyst at Constellation Research, says this about building a microservices future, “This is the heart of Salesforce’s M&A strategy. They have to integrate, orchestrate, and manage microservices in their future roadmap,” he said. “The AI-driven world ahead needs contextual microservices.”

Microservices are a way of building applications made up of tiny, separate pieces, rather than the single, unified application we used to build in the past. This makes modifying and refreshing easier and more practical.

Brent Leary, owner, and principal at CRM Essentials, a CRM consulting firm, sees the deal through a customer prism. “Well, it shows just how crucial [Internet of Things] and [Artificial Intelligence] is to the future of Salesforce‘s ability to create the customer success platform of the future,” he said.

“It also reinforces that they feel investing deeper into customer success is a better ROI and growth play then extending to other enterprise app areas outside of their core focus,” Leary added.

As with all deals this big, it needs to pass regulatory things first, but when it does, it is expected to close by the end July.



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