Salesforce to Buy Informatica for $8 Billion

Source Credit : Reuters

On Tuesday, Salesforce announced its intention to acquire Informatica for approximately $8 billion. This strategic move underscores Salesforce's commitment to enhancing its data management capabilities, positioning the company to strengthen its competitive advantage in the rapidly expanding artificial intelligence market.

Following pressure from activist investors pushing for increased profitability, the cloud-software giant is once again pursuing major acquisitions, marking its return to such high-value deals after a prolonged period of low activity.

Last year, deal discussions with Informatica were put aside after the two companies were unable to come to an agreement on the terms of the deal.

In its largest transaction since acquiring Slack Technologies for almost $28 billion in 2021, Salesforce would gain the benefits of acquiring Informatica. This move would aid in the expansion of its data management capabilities and support its increased focus on artificial intelligence-driven offerings.

By acquiring Informatica, Salesforce can strengthen its oversight of business data management and utilization. This is a crucial move as the company strives to further integrate generative AI into its products.

The company provides AI agents, also known as programs capable of independently completing routine tasks, to businesses. These tasks range from recruiting to customer service and are available on both the company's platform and messaging app, Slack.

In December, it was reported that over 1,000 transactions had been completed for "Agentforce", the company's AI-driven platform for creating virtual representatives. However, because Salesforce's MuleSoft also works in similar industries as Informatica, there is a possibility that the agreement may be subject to antitrust examination.

Salesforce has demonstrated its willingness to invest in growth through acquisitions. Its latest deal involves paying a significant premium of approximately 30% above Informatica's closing price on May 22, when news of negotiations resurfaced. This follows the company's previous successful acquisition of Tableau Software for $15.7 billion in stock in 2019 and its recent massive deal with Slack Technologies in 2021.

In 2023, activist investors such as ValueAct Capital and Elliott Management raised concerns about Salesforce's strategy and called for modifications to enhance profitability, prompting scrutiny of their deals.