Salesforce’s Rumored Informatica Acquisition Off the Table

Shares of Salesforce were trading higher on Monday as Wall Street rewarded word that the channel-friendly CRM giant will not pursue an Informatica acquisition — and as Informatica itself insists it’s not entertaining sale talks.

Salesforce stock was up nearly 2% on the news as of 2:25 p.m. ET Monday. Informatica’s shares, meanwhile, were down more than 8%.

The activity came after the Wall Street Journal first reported that Salesforce had called off an Informatica acquisition once it became clear the two companies could not agree to terms. Per the WSJ, Salesforce was mulling a bid in the mid-$30s per share for Informatica. The total likely would have amounted to between $12 billion and $14 billion.

Then, on Monday, Informatica itself issued a statement declaring that it “is not currently engaged in any discussions to be acquired.”

That rebuttal was delivered in response to about 10 days’ worth of industry rumors that Salesforce was pursuing an imminent Informatica acquisition. But investors at both companies did not welcome the news. Salesforce stock fell about 7% in response to the news that broke April 12. Shareholders have been trying to curb CEO Marc Benioff’s spending sprees since the Tableau and Slack deals, which, combined, amounted to a little more than $43 billion.

Informatica stock declined almost as much as Salesforce’s amid the potential purchase scuttlebutt. While the vendor once again trades on Wall Street, private equity firm Permira owns nearly half of it. Permira and the Canada Pension Plan Investment Board, which also holds significant interest in Informatica, took the company private in 2015 in a $5.3 billion transaction. Then, three years ago, they took Informatica public once again.

On Monday, Informatica, a data management vendor that also sells through the channel, said its financials are sound. It will announce its first-quarter earnings on May 1. However, Informatica provided a hint: It expects its revenue, annual recurring revenue from subscriptions and operating income, to all fall within the “upper half of the guidance ranges” delivered on Feb. 14, according to a press release.

“Our business fundamentals continue to be very strong and we look forward to discussing our first quarter financial results and outlook on May 1,” said Amit Walia, CEO of Informatica.

What Might an Informatica Acquisition Have Done for Salesforce?

In terms of synergies, both Salesforce and Informatica focus on data. Both, too, emphasize their cloud- and subscription-based delivery methods. According to the Informatica acquisition rumor mill, Salesforce would have placed its new business unit alongside MuleSoft. There, it would have played a role in systems integration, data lake management and other responsibilities.

Again, though, investors and certain other key players saw the combination as detrimental. For one thing, MuleSoft and Informatica would have duplicated certain processes. Gaurav Dhillon, who co-founded Informatica and now serves as CEO of SnapLogic, told MarketWatch in a video interview that Informatica customers would experience a “rocky road” due to “significant overlap in integration products.” That difficulty likely would last “more than five years,” Dhillon predicted.

On a similar note, Guggenheim Securities analyst John DiFucci said in client memo that Informatica directly competes with MuleSoft. That could jeopardize much of Informatica’s reputation as a neutral vendor and alienate certain end users, he said.