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Microsoft’s Salesforce Acquisition Talks Ended On Price Issues, says CNBC

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What could have been one of the most valuable and significant tech acquisitions of current times isn’t happening anytime soon as per CNBC’s exclusive reports. The “significant talks” held in spring between Microsoft and San Fran-based cloud major Salesforce, have reached a dead end on price issues.

Talking on specific numbers, CNBC reported that Microsoft was willing to offer about $55 billion for the world’s biggest maker of online sales software but Salesforce CEO and founder Marc Benioff had expected as much as $70 billion. Both Microsoft and Salesforce declined to comment on the report.

Microsoft, although a late entrant into the cloud computing market, has lately been quite keen on expanding its presence in the booming market. And that keenness has seen aggression, ever since Satya Nadella joined office as CEO 18 months ago. Nadella made cloud computing his No. 1 priority as CEO, and had even projected that Microsoft could reach a staggering $20 Billion in cloud revenue by 2018, up from a current annualized rate of $6.3 billion, the centerpiece of growth being their cloud hosting platform Azure as well as the Office 365 software suit.

In fact, in order to lure more enterprise and developer customers towards its platforms, Microsoft announced a slew of new, Azure-targeted features in its recently concluded Build Conference.

Salesforce which was founded in 1999 by former Oracle executive Marc Benioff and valued at $48.4 billion at present, had reported $1.51 billion in revenue for its fiscal first quarter this week, and forecast sales for the full year could be as high as $6.55 billion making it the most successful purely cloud-based application company in the industry and hence an ideal fit for Microsoft given its cloud computing stints.

Salesforce is also considered a pioneer of customer relationship management, or CRM in the cloud, which companies use to help manage their sales efforts and currently leads the global customer relationship management (CRM) market, which is valued at $23 billion annually, according to tech research firm Gartner.

Salesforce provides its services online, with no software directly installed on PCs, making the company attractive to technology giants such as Oracle and Microsoft, who have been late entrants into the fast-growing cloud computing market.

Rumors of acquisition talks between the two companies first surfaced last month when Bloomberg reported on an approach of an unnamed suitor that was not Microsoft, for Salesforce. Bloomberg also reported earlier this month that Microsoft was evaluating a bid for Salesforce, but said no talks between the two companies were taking place. The deal envisioned Microsoft using a significant portion of its $95 billion cash pile to pay for Salesforce.

However, the talks are not expected to re-emerge anytime soon. In addition to a disparity in price expectations, Microsoft’s CEO Satya Nadella was said to be somewhat reluctant to pull the trigger on a deal of such size and consequence for his company.

A Microsoft-Salesforce deal would have been among the largest tech acquisitions ever, and Microsoft’s largest ever following its 2011 purchase of video-calling company Skype for $8.5 billion. Under former CEO Steve Ballmer, Microsoft tried and failed to acquire Yahoo in 2008 for $45 billion.

The honor of the biggest tech acquisition in history belongs to the AOL-Time Warner merger announced in 2000. The original purchase price was for $162 billion, but AOL’s declining share price capped the deal at $106 billion when it was completed in 2001.


 

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