Salesforce announced Thursday that it would pay $1.9 billion in cash for Own Co., a startup specializing in tools for backing up data in cloud-based applications. Salesforce intends to close the deal in the quarter ending in January 2025 if regulators give it their blessing, according to a statement.
The startup, formerly known as OwnBackup, was valued at $3.35 billion in a 2021 funding round. Salesforce Ventures, the cloud software company’s venture arm, invested in that round and earlier ones.
The proposed deal would mark the return of sizable deals for Salesforce, less than two years after co-founder and CEO Marc Benioff said the board was eliminating a committee on mergers and acquisitions.
Benioff’s pronouncement came after activist investors bought stakes in Salesforce and raised questions about profitability after the company had splurged on expensive assets, including MuleSoft and Slack, without delivering major growth in return.
The decline in value for Own reflects a more sluggish backdrop for software companies.
In late 2021, investors became less interested in cloud software, which had seen a surge in adoption in 2020 thanks to remote-work policies instituted after Covid. Central banks raised rates to ward off inflation, prompting money-losing cloud companies to focus more on profitability. Enterprises aiming to slim down information-technology budgets consolidated their purchases, burdening single-product companies, including startups and publicly traded companies.
Anaplan, Avalara, Coupa, Everbridge, Qualtrics, Sumo Logic and Zendesk all went private.
Own, which had specialized in helping Salesforce clients, sought to diversify. In its 2021 funding announcement, it touted its intent to work with Microsoft’s Dynamics enterprise software that competes with Salesforce’s core applications. Support for ServiceNow followed.
Salesforce in recent weeks has also revealed plans to buy smaller startups PredictSpring and Tenyx.
Salesforce said the Own acquisition wouldn’t impact Salesforce’s shareholder return initiatives, and said the deal would be accretive to free cash flow starting in the second year after the deal closes.
In April, data-management software maker Informatica said it was not in talks to be acquired after media outlets reported Salesforce was interested in buying the company for around $10 billion.
“We’re going to be looking at products organically, but, yes, we will continue to look at products inorganically,” Benioff told analysts on Salesforce’s May earnings call. “But as we’ve committed to you, if we’re looking at a large-scale acquisition, we’re going to make sure that it is not dilutive to our customers, that it’s accretive, that it has the right metrics.”
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