Salesforce’s $6.5 billion Acquisition of Mulesoft


 

Overview of the deal

  • Acquirer: Salesforce

  • Target: Mulesoft

  • Estimated value: $6.5bn

  • Announcement date: 21/3/2018

  • Acquirer Advisors: Bank of America Merrill Lynch (BAML)

  • Target Advisors: Goldman Sachs

Salesforce’s deal to buy Mulesoft for $6.5bn came together rapidly. The two companies started a discussion concerning a potential acquisition as late as February and Salesforce put forward their initial tender offer at $38 a share on March 2nd. Five days later, MuleSoft CEO Greg Schott came back with a counteroffer at $45 a share. Salesforce agreed and the deal was made public on March 20.


Despite speculation from analysts, regulatory documents show that Salesforce was not engaged in a bidding war for Mulesoft. The seemingly excessive price tag is rather a result of Mulesoft’s CEO, Schott, unwillingness to settle for anything less than the valuation he found to be justified given the estimation of future revenue growth.


Disclosure suggests that the board of directors at Salesforce are convinced that owning Mulesoft presents an opportunity for considerable long-term growth. In fact, Mulesoft has in a detailed analysis offered financial estimates all the way to 2037 highlighting that they expect to be around 17 times bigger by then in terms of revenue.


TechCrunch stresses Salesforce’s need for an API integration engine that would help the company to access data across organisations. This is particularly important as they are building out their AI and machine learning layer. A company like Mulesoft, with the technology it provides, will give Salesforce exactly this.

Company details (Salesforce)

Salesforce is an American cloud computing company that provides businesses with an interface for case management and task management, and a system for automatically routing and escalating important events.


- Founded in 1999, headquartered in San Francisco, USA

- President and CEO: Marc Russell Benioff

- Number of employees: 29,000

- Market Cap: $85.17bn - EV: $82.87bn

- LTM Revenue: $10.48bn - LTM EBITDA: $1.41bn

- LTM EV/Revenue: 8.02x - LTM EV/EBITDA: 84.82x


Company details (Mulesoft)

Mulesoft is an American software company that provides integration software for connecting applications, data and services. This enables businesses to connect enterprise applications on-premises and to the cloud and subsequently eliminate the need for point-to-point integration code.


- Founded in 2006, headquartered in San Francisco, USA

- President and CEO: Greg Schott

- Number of employees: 1,200

- Market Cap: $5.95bn - EV: $5.75bn