Salesforce to Acquire Informatica for $8 Billion

Salesforce anticipates finalizing the acquisition of Informatica early in the next fiscal year through a combination of cash and new debt. Salesforce Inc. announced its plan to acquire Informatica Inc. for approximately $8-billion, aiming to enhance its competitive advantage in the growing artificial intelligence market.

The cloud-software company is engaging in significant mergers and acquisitions again, after a period of reduced activity due to pressure from activist investors seeking improved profitability. Previous discussions between Salesforce and Informatica were shelved last year when they couldn't agree on terms.

The acquisition of Informatica, Salesforce's largest since acquiring Slack Technologies in 2021 for nearly $28-billion, will support Salesforce in expanding its data management capabilities as it increases its focus on AI-powered products. This deal will also enable Salesforce to exert greater control over the management and utilization of business data, a crucial step as it aims to integrate generative AI more deeply into its offerings.

Salesforce CEO Marc Benioff stated that the combination of Salesforce and Informatica will establish the most comprehensive data platform in the industry, reinforcing Salesforce's position in the data enterprise market valued at over $150-billion. Salesforce has been providing AI agents to businesses for tasks such as recruiting and customer service and has completed over 1,000 paid deals for its AI-powered virtual representative platform, “Agentforce.”

Salesforce is offering $25 per Informatica share, representing a premium of approximately 30% over Informatica’s closing price on May 22, before the renewed deal talks were reported. Informatica's shares increased by 5.8 per cent in premarket trading to $23.86, while Salesforce’s shares rose by 1.2 per cent. The acquisition is projected to improve Salesforce’s operating margin starting from the second year after the deal is completed.

According to Scotiabank analysts, this acquisition could assist Salesforce in keeping pace with its software competitors, as data management software is increasingly offered as part of comprehensive vendor toolkits. Salesforce has a history of acquisitions, including the purchase of Tableau Software in 2019 for $15.7-billion in stock, and Slack in 2021. These transactions faced scrutiny in 2023 from activist investors such as ValueAct Capital and Elliott Management, who advocated for changes to enhance profitability.