JMP Says Other Buyer For CRM Could Be Google

In a report published Wednesday, JMP Securities maintained a Market Outperform rating on salesforce.com inc CRM, with a price target of $75.

There is a news report about Microsoft Corporation MSFT evaluating a bid for salesforce.com. The news report added that the cloud software company had also been approached by another prospective buyer. The analysts believe that the “other would-be buyer” is most likely Google Inc GOOG (rated Market Outperform, PT $625).

Referring to various prospective bidders, the report said that while Microsoft is considering a purchase, Oracle Corporation ORCL is "less likely" and SAP SE SAP may not be considering it.

The report outlined why Google could be bidding for salesforce.com:

• The company had $65B in cash and marketable securities as of March 31, 2015.
• The acquisition would help Google become more relevant in the enterprise and would offer significant synergies in the SMB market.
• Google already has a strong track record of integrating acquisitions.
• Significant opportunity to integrate Google’s core search business (which has displayed slowing growth) with sales and marketing automation solutions from salesforce.com.
• salesforce.com’s Platform-as-a-Service business would help Google compete against Amazon.com Inc AMZN and Amazon Web Services. Amazon appears to be on a competitive “collision course” with Google, in our view.
• Both Google and salesforce.com find a place in the Fortune’s 2015 edition of “100 Best Companies to Work For,” while Oracle, Microsoft and SAP are not ranked. So a possible deal between Google and salesforce.com would mean a better culture fit.
• Google’s recently hired CFO Ruth Porat was with Morgan Stanley since 1987 and Morgan Stanley took salesforce.com public in 2004.

The report also outlined why Google would not buy salesforce.com:

• As of March 31, 2015, roughly $37B of Google’s cash was held by foreign subsidiaries.
• This deal would represent Google’s largest acquisition by far.
• Google is primarily a business-to-consumer company, while salesforce.com is primarily a business-to-business company.
• Google may find it difficult to consider the largest acquisition in its history before its new CFO settles in.