Microsoft Corporation Might Be Interested In Acquiring Salesforce.com, Given Its Cloud Interests

Salesforce.com

Microsoft (MSFT) is said to be mulling over bidding for rival Salesforce.com after learning that another potential suitor approached the CRM provider, according to sources cited in a new Bloomberg report.

Salesforce has hired two investment bankers to help it handle and evaluate takeover offers, ranging from spurning bids to hammering out a deal, the report said. At this point, Microsoft isn’t in negotiations with Salesforce officials on a takeover bid and no trial balloon offer has been made.

The news again fueled a feeding frenzy on Salesforce's stock on Tuesday, with shares jumping 6 percent in afternoon trading--prompting a brief halt over volatility--before slipping back to close at $72.80, giving the company a market capitalization of about $49.4 billion at day’s end. The stock has run up 28 percent so far this year.

Salesforce posted sales of $4.07 billion for the full year 2014 and expects revenue to reach $5.3 billion in fiscal 2015.

Last week, Microsoft was mentioned with IT heavyweights Hewlett-Packard (HPQ), IBM (IBM), Oracle (ORCL) and SAP (SAP) as likely suitors possibly vying to take over Salesforce.com.

Bloomberg sources said Microsoft expects to be among those possibly competing to acquire Salesforce. Spokespeople from Microsoft and Salesforce declined to comment on the rumor.

A year ago, Microsoft and Salesforce worked out a deal that allows customers to access Salesforce.com and run operations from Windows-based systems and devices.

Oracle hasn’t commented on its interest in Salesforce one way or the other, but observers believe the database vendor is the most likely choice in a takeover bidding. There’s little question that Oracle is starting to beat its chest with its own cloud efforts, making it clear that Salesforce is in its sights.

“On our last quarterly conference call, I predicted that in our fiscal year 2016 Oracle would likely sell more SaaS and PaaS new business than Salesforce.com,” Oracle executive chairman and CTO Larry Ellison said late in March. “I was way too cautious and conservative,” he said.

“Our cloud business is growing a lot faster than even I expected,” said Ellison. “Our cloud bookings are now growing at over 100% per year, so I'd like to revise my prediction. I now believe that Oracle will sell more new SaaS and PaaS business than Salesforce.com in this current calendar year, 2015,” he said.