Salesforce to buy Tableau for $15.3 billion in data push

Bloomberg

Salesforce.com Inc., which makes America’s dominant sales-tracking software, agreed to buy Tableau Software Inc. in an all-stock deal valued at $15.3 billion that it said will help give customers more ways to analyse data. The acquisition of software maker will move Salesforce.com further away from its central business, marking a new era for the top seller of software for managing customer relationships.
The deal is Salesforce’s largest transaction ever — dwarfing its purchase last year of MuleSoft Inc. for $6.5 billion, the previous record. Tableau will bring San Francisco-based Salesforce into the business intelligence market, far deeper into analytics than it has previously ventured. Investors were skeptical, sending Salesforce shares to their worst day in seven months.
Co-Chief Executive Officers Marc Benioff and Keith Block promised revenue of $28 billion a year by fiscal 2023. But investors have been concerned that the pace of growth at Salesforce, long the bellwether in the cloud applications market, was slowing. The deal is another way for Benioff to keep his word on growth and product capabilities. While the executives have said Salesforce didn’t need to make major acquisitions to earn the growth, the company has
continued buying businesses. Tableau will bolster sales this year and bring the company further into competition with software giants Microsoft Corp. and Oracle Corp., both of which offer business intelligence tools.
The deal means that Salesforce, whose key to success has been a dominant position in customer relations, is becoming more of a general-purpose information technology company — following Oracle’s transformation from database giant to IT conglomerate over the last 20 years, when it snapped up new products and customers.
The acquisition will test Salesforce’s focus, said Zane Chrane, an analyst at Sanford C. Bernstein & Co. Business intelligence “is not Salesforce’s core competency and there is much Tableau does that doesn’t pertain to
the CRM world, making the fit slightly imperfect,” Chrane wrote in a note. The acquisition is also an “implicit admiss-
ion” that Salesforce’s analytics product, Wave, “was a flop.”
Tableau will also move Salesforce more deeply into corporate data centers. Some of the analytics company’s software sits on clients’ computer servers, and it has sought to generate more sales from clo-ud-based software accessed through the internet. While MuleSoft’s integration tools can help customers connect Tableau to other systems, Salesforce’s heritage is in the cloud.
Buying Tableau will be “transformative” for Salesforce, Wedbush Securities analyst Steve Koenig said. Salesforce will open a second headquarters in Tableau’s hometown of Seattle, and will let the unit operate independently there under current CEO Adam Selipsky — a relatively unusual decision for Salesforce, whose center of power has always been in
San Francisco.
Benioff’s recent obsession has been Salesforce’s Customer 360 initiative — a promise that the software maker will be able to use all the consumer data gleaned by its products for the benefit of corporate clients.
“We’ve pivoted our entire company into something that we call Customer 360,” Benioff said on Salesforce’s earnings conference call last week. He tweeted that Tableau accelerates the “Customer 360 dream,” acknowledging that Salesforce didn’t have all of the capabilities to pull it off — even with MuleSoft’s data integration tools.
Benioff is the executive who leads Salesforce’s largest acquisitions, particularly ones that
include a pivot to new mark-
ets. His emotional buying style often means paying large markups to purchase companies that bolster Salesforce.