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Equities

Informatica Denies Sale Amid Salesforce's $10B Interest

Informatica not for sale after Salesforce's $10 billion acquisition interest cools, leading to a 7% drop in Informatica shares.

By Alex P. Chase

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4/22, 10:28 EDT
Coinbase Global, Inc.
Salesforce, Inc.
Marathon Digital Holdings, Inc.
Riot Blockchain, Inc
Tesla, Inc.
Verizon Communications Inc.
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Key Takeaway

  • Informatica's shares fell over 7% after announcing it's not for sale, despite Salesforce's reported $10 billion acquisition interest.
  • Salesforce, under activist investor pressure, may temper its M&A strategy following halted talks with Informatica and recent strategic shifts.
  • Pre-market dynamics show mixed outcomes for tech stocks; Verizon up 2%, Tesla down 3%, and crypto-related stocks gain amid Bitcoin optimism.

Acquisition Talks Halted

Informatica, an enterprise data management company, announced it is not currently engaged in discussions to be acquired, following reports of Salesforce's interest in a deal valued at approximately $10 billion. This news led to a more than 7% drop in Informatica shares, while Salesforce experienced a 1% increase in its stock price. The potential acquisition, which would have been Salesforce's largest since its 2021 purchase of Slack, fell through due to disagreements on terms, with price being a significant sticking point. Informatica's CEO, Amit Walia, emphasized the company's strong business fundamentals and upcoming financial results discussion. Salesforce, having faced investor scrutiny over its acquisition strategy, had reportedly been in talks offering a bid in the mid-$30s per share for Informatica.

Market Reactions and Strategic Shifts

Salesforce's history of significant acquisitions, including the over $27 billion deal for Slack Technologies and a more than $15 billion purchase of Tableau Software, has attracted attention from activist investors. These investors, including Elliott Management and ValueAct, have campaigned for changes at Salesforce, leading to a dismantling of its M&A board committee and a focus on re-hiring talent and implementing layoffs. Salesforce CEO Marc Benioff's recruitment of ValueAct’s Mason Morfit to the board and the halted talks with Informatica suggest a possible tempering of Salesforce's merger and acquisition appetite. Analyst Don Bilson of Gordon Haskett noted this development as an indication of Salesforce's readiness to engage in smaller-scale acquisitions.

Pre-Market Dynamics: Tech Stocks and Crypto Movement

The pre-market activity on Wall Street showed a mix of outcomes for tech and telecom stocks, with Informatica's shares dropping 6% due to the halted acquisition talks with Salesforce, which saw a 3% increase in its stock price. Verizon Communications reported strong earnings, leading to a 2% rise in its shares. In contrast, Tesla's shares fell by 3% amid price cuts in China, suggesting potential price wars in the electric vehicle market. The cryptocurrency sector experienced positive momentum, with companies like Coinbase, Riot Platforms, and Marathon Digital seeing gains between 2% and 5%, driven by Bitcoin's halving event and the resulting market optimism.

Street Views

  • Don Bilson, Gordon Haskett (Neutral on Salesforce):

    "Since early last year, Benioff has been on a diet that includes no meaningful M&A, and this episode tells us that he’s ready to do some snacking."

Management Quotes

  • Amit Walia, CEO of Informatica:

    "Our business fundamentals continue to be very strong and we look forward to discussing our first quarter financial results and outlook on May 1."