M&A Alert—June 4, 2013
Salesforce.com Acquires Multichannel Marketing Platform ExactTarget for $2.5 Billion
Author: Tom Brehme
Transaction Size: $2.5b
On June 4, 2013, Salesforce.com (NYSE: CRM; market cap: $22.4b) entered into a definitive agreement to buy all outstanding shares of multichannel marketing platform, ExactTarget (NYSE: ET; market cap: $2.3b), for a total consideration of $2.5 billion. Salesforce is paying $33.75 per ExactTarget share, representing a 52 percent premium.
ExactTarget’s multichannel platform incorporates email, web and social campaign management and marketing automation to help companies grow their sales, marketing reach and customer relations by enabling one-on-one engagement with potential and existing customers. ExactTarget’s Interactive Marketing Hub targets customers through emails, websites, text messages, voice messages and social networks such as Facebook and Twitter to help companies maintain and navigate their cross-platform presence. ExactTarget’s platform includes the ability to target, deliver, track and manage permission-based marketing campaigns with messages ranging from transactional or abandoned cart reminders to dynamic embedded content and live offers. The company’s philosophy is centered on the importance of honoring subscriber preferences for what content they want to receive from a company, when and in which format they would like to receive it.
ExactTarget has over 6,000 customers such as Adobe, AAA, Coca-Cola, GAP, Groupon, Hulu, Intuit, Nike, Oakley, priceline.com and Zappos.com (a division of Amazon). ExactTarget also features over 500 integrations, including CRM partnerships with Salesforce, Microsoft Dynamics and Oracle and web analytics from Adobe and Webtrends. Founded in 2000 and headquartered in Indianapolis, Indiana, ExactTarget employs more than 1,600 people in the U.S., South America, Europe and Australia.
ExactTarget raised $161.5mm in its March 2012 IPO by selling 8.6mm shares for $19 apiece. Shareholders in the company include Battery Ventures (Michael Brown), Collina Ventures, First Round Capital, Greenspring Associates (James Lim), Insight Venture Partners (Nikitas Koutoupes), SAP Ventures (Jai Das), Scale Venture Partners (Rory O’Driscoll) and Technology Crossover Ventures (David Yuan, John Burke, Kapil Venkatachalam).
Salesforce.com provides a leading cloud-based customer relationship management (CRM) and sales automation application for businesses. Salesforce has moved beyond its core CRM and sales automation platform to offer tools to manage digital marketing largely through social channels via the acquisitions of Buddy Media (social media marketing platform) and Radian6 (social media engagement monitoring). Salesforce.com also offers customer support and help desk, cloud application development, enterprise social network tools and sales performance management.
Salesforce.com is paying $33.75 per ExactTarget share, which amounts to a 52 percent premium, or $11.65 above ExactTargets’ previous day closing price of $22.10. In total, Salesforce is spending approximately $2.5 billion in cash. ExactTarget posted 2012 revenues of $292.3mm, with an operating loss of $21.0mm.
Transaction Value $2.5 billion
TV/2012 Revenue ($292.3mm) 8.6x
TV/2013E Revenue ($378.9mm) 6.6x
There have been a number of recent transactions within the digital marketing space, including Oracle’s acquisitions of Eloqua, Vitrue and Involver, Google’s acquisition of Wildfire, Salesforce’s acquisitions of Buddy Media and Radian6, ExactTarget’s acquisition of Pardot, IBM’s acquisition of Unica, Adobe’s acquisition of Omniture and Efficient Frontier and Teradata’s acquisitions of Aster Data and Aprimo.
The integration of ExactTarget’s multichannel campaign management and marketing automation platform with Salesforce.com’s digital marketing capabilities — publishing with Buddy Media, listening with Radian6 and advertising with Social.com — will provide Salesforce’s digital marketers a comprehensive marketing suite that includes email, web, mobile and social channels.
Architect Partners’ Observations
With one big (financial) stroke, Salesforce.com is able to fill an enormous gap in its marketing cloud. The acquisition gives Salesforce solutions across every major pillar of digital marketing, enabling a robust customer management platform that allows companies to market to their customers throughout every phase of the customer lifecycle.
Many in the industry have expressed concern over the high acquisition price, but Salesforce clearly believes that the growth in digital marketing spend (Gartner predicts that by 2015 consumer technology companies will have moved one-third of their traditional marketing budgets to digital and CMOs will outspend CIOs on IT by 2017) justifies the price.