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Morgan Stanley Sees 'Low Probability' In Oracle Bid For Salesforce

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The acquisition of, Inc. (NASDAQ: CRM) by Oracle Corporation (NYSE: ORCL) would need to overcome withering antitrust scrutiny as well as deeply clashing corporate cultures, an analyst said Thursday.

"It would be the largest software deal in history and by definition, large deals are low probability events," said Morgan Stanley's Keith Weiss, who maintains an Overweight rating on Salesforce.

Salesforce, still up about 10 percent since a report Wednesday that it had hired a financial advisor to evaluate offers, retreated about 3 percent recently to $72.30.

Weiss, who said he has no direct knowledge of a potential deal, suggested the reported move may be "mainly to satisfy its fiduciary responsibilities."

While there are multiple potential Salesforce suitors, Weiss said Oracle is "the most interesting."

The deal would make Oracle "the undisputed leader" in cloud computing and double its rate of revenue growth to 6 percent.

Synergies could boost Salesforce's margins, adding substantial free cash flow that would result in a higher stock price for Oracle.

Moreover, if either Salesforce's Chief Executive Marc Benioff or Vice Chairman Keith G. Block got in line to succeed Oracle's Larry Ellison, "it would inspire more confidence" after Oracle's recent "shaky performance," according to Weiss.

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Feb 2018JefferiesUpgradesHoldBuy
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Posted-In: Keith Weiss Morgan StanleyAnalyst Color Reiteration Analyst Ratings


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