Market Overview

M&A 'In Vogue' In The Software Space

Share:
M&A 'In Vogue' In The Software Space

“Software M&A seems to be back in vogue as both strategic and financial buyers announced high-priced acquisitions,” BTIG’s Joel P. Fishbein said in a report.

salesforce.com, inc. (NYSE: CRM) announced a $2.8 billion deal for Demandware Inc (NYSE: DWRE). Vista Equity Partners inked a $1.9bn agreement for marketing automation software player Marketo Inc (NASDAQ: MKTO).

While the multiples may seem “eye-catching,” the price premium is particularly interesting, as this exceeds 50 percent in both instances, Fishbein said. He added that these figures raised two obvious questions:

  1. Why did the buyers agree to spend so much higher than the current market value for these assets?
  2. Is the market currently mispricing these companies?

Fishbein pointed out that the answer was related to scarcity value, as both companies were “unique, high growth assets with a leading (or fast growing) market position and relatively favorable competitive dynamics.” He added that both were “pure-play on-demand application companies that are either disintermediating legacy competitors, or are already established leaders in their market.”

Other Deals

ServiceNow Inc(NYSE: NOW) acquired Brightpoint Security in all cash deal for an undisclosed amount. Thoma Bravo purchased Qlik Technologies Inc(NASDAQ: QLIK) for $3 billion, representing $30.50 per share.

The analyst believes that the software consolidation wave was only just beginning and many more deals could follow. BTIG has Buy ratings for Salesforce, Demandware and ServiceNow, with price targets of $100, $55 and $85, respectively.

Latest Ratings for CRM

DateFirmActionFromTo
Feb 2020UBSMaintainsBuy
Feb 2020WedbushMaintainsOutperform
Feb 2020Cowen & Co.MaintainsOutperform

View More Analyst Ratings for CRM
View the Latest Analyst Ratings

Posted-In: btigAnalyst Color Long Ideas M&A Reiteration Analyst Ratings Tech Trading Ideas Best of Benzinga

 

Related Articles (CRM + DWRE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SNPSCFRAMaintains160.0
GRPNMorgan StanleyMaintains1.5
PPCCFRADowngrades30.0
HMSYCantor FitzgeraldReiterates33.0
FSLRCascendMaintains60.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com