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Both companies’ boards of directors approved the deal, which “is expected to be completed during Salesforce’s fiscal third quarter ending October 31, 2019, subject to customary closing conditions.”
Tableau is Salesforce’s largest known acquisition to date, beating out its deal with API integrator MuleSoft by more than a factor of two. The chart below shows the top-ten largest M&A transactions by the customer relationship management software provider.
According to the announcement, some of Tableau’s software capabilities will be integrated into Salesforce Einstein, its AI-enabled assistant and recommendation engine. “With Tableau and Einstein together, Salesforce will deliver the most intelligent and intuitive analytics and visualization platform for every department and every user at any company. Tableau will make both Customer 360 and Salesforce’s analytics capabilities stronger than ever, and enable the company to reach a much broader set of customers and users.”
Salesforce stated its Tableau buyout will take place through an all-stock transaction, exchanging each share of Tableau’s Class A and Class B stock for 1.103 shares of Salesforce common stock.
Salesforce is paying a premium for Tableau, which on Friday before the deal was announced, had a market capitalization of approximately $10.8 billion. In premarket trading on Monday following the announcement, Tableau shares are trading as much as 35 percent higher on the news.
Following a dramatic repricing of Tableau’s stock in the wake of the 2015 “SaaS crash” the data analytics company’s shares climbed steadily upwards, until fairly recently.
In early May, Tableau reported Q1 2019 revenues of $282.5 million, which despite being 15 percent higher than the same period last year still fell short of Wall Street analyst expectations of $286.8 million. In that same quarter, Tableau posted an unexpected profit of $2 million (analysts had anticipated a loss) but the company posted $5.8 million in net income in Q1 2018.
In other words, it looks like Tableau’s growth was beginning to plateau a bit, and given the price premium paid by Salesforce, it likely made more sense for the company to keep growing under the aegis of a bigger corporation rather than continuing to go it alone.
Illustration: Li-Anne Dias