- Salesforce pursued Tableau for around six months before agreeing a deal to buy it for $15.7 billion in a mega-deal announced Monday, sources familiar with the transaction told Business Insider.
- Conversations between the two companies started out with a personal text message from Salesforce CEO Marc Benioff and came together at Benioff’s San Francisco mansion.
- Over the course of six months, it nearly came together three other times, one person said, but volatility on the public markets got in the way of the all-stock deal.
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Salesforce’s $15.7 billion acquisition of Tableau announced Monday started with a text, came together over a meeting in a San Francisco mansion, and very nearly fell apart multiple times.
Around six months ago, Salesforce CEO Marc Benioff was looking for a way to put to use all of the data generated through MuleSoft, the big data platform it acquired for $6.5 billion in May 2018, according to two people familiar with the process.
Benioff, who’s known for his personal involvement in acquisitions, reached out to the team at Tableau over text message to see if there was any way the two companies could work together, the people said.
Over the next six months, there was a lot of push and pull. The tie-up had nearly come together three times before, one person said. But market volatility kept getting in the way.
From December 13 to 24, a few weeks after conversations first started, Salesforce’s stock fell 14% and Tableau’s stock fell nearly 16%.
At the same time, the CBOE Volatility Index, a measure of market volatility, hit its highest point of 2018. Typically, companies don’t want to go through major events such as mergers or public offerings if the VIX has spiked.
Both companies’ stock prices continued to fluctuate around 5% to 10% nearly week-to-week up until the deal was signed.
Since neither company was willing to budge on price, and it was an all stock-deal, the deal was postponed until the market had rebounded, the people said.
On June 3, less than a week before the deal was announced, tech stocks were hit hard on worries that Facebook and Google might face more anti-trust scrutiny. Salesforce shares traded down 4% and Tableau’s stock dropped to $108.26, its lowest price in six months.
Until last Friday, it wasn’t so clear that the deal would happen.
“I think that we’ve tried to do something for a long time, and it’s just hard to get the stars to align,” Benioff said on a conference call Monday. “And I think that we’re fortunate that we got there. “
Ultimately, Salesforce agreed to acquire Tableau in all-stock transaction that gave Tableau 1.103 shares of Salesforce for every one share of its own stock. This valued the company at $177.88 per share, up from where it closed on Friday at $125.22.
If the deal gets approved by shareholders, the acquisition is expected to close by the end of October.
Tableau bounced back from turmoil
Tableau is a data visualization platform that transforms swaths of data into easy to digest graphics. It competes with Microsoft Azure’s Power BI, as well Looker, which Google acquired last week for $2.6 billion.
When Salesforce approached the company about an acquisition six months ago, Tableau was on the upswing after a period of turmoil.
The stock hit a high of $128.74 per share in 2015, before plummeting, sinking to just $37.22 per share at one stage in 2016. In an effort to right its course, the company switched to a subscription revenue model in 2017 from a model where customers paid a higher price up front to use it perpetually. In the years since, the stock has slowly gained momentum, and eventually surpassed its previous high last year.
It was around the time that things picked up financially for Tableau that Benioff initiated discussions.
Read more: From an email to a $6.5 billion deal in 46 days: How Salesforce’s bid for MuleSoft came together
With its downward slump in the rear-view mirror, Tableau CEO Adam Selipsky and the board of directors made clear that there would be a high bar for the company to sell, two of the people said. On the other hand, Salesforce was very conscientious about the optics of overspending on an acquisition, they said.
Once the conversations gained momentum, Benioff invited both teams over to his home in Sea Cliff, a San Francisco neighborhood with large houses and views of the Pacific Ocean. It was there that the teams “put meat on the bones” of the deal, one person said.
Salesforce brought in Bank of America Merrill Lynch to advise financially. The bank had previously worked with the company on its acquisition of MuleSoft.
Tableau worked with Goldman Sachs on the deal. The bank was lead left on Tableau’s IPO in 2013, and led their follow on deals later that year and again in 2014. Goldman had also recently sold three other companies to Salesforce, including MuleSoft.
It’s unclear whether Tableau spoke with any other companies during the acquisition discussions.
Salesforce declined to comment.
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