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Salesforce Strikes Definitive Deal to Buy Demandware for $2.8 Billion

Salesforce Strikes Definitive Deal to Buy Demandware for $2.8 Billion, inc. (NYSE: CRM) and Demandware (NYSE: DWRE) disclosed Wednesday that they have reached a definitive agreement under which the former would buy the latter in a transaction worth approximately $2.8 billion. According to the companies, under the agreed terms, Salesforce would begin a tender offer for all Demandware shares for $75.00 per share, in cash. The two firms expect the transaction to close in the second quarter of Salesforce's fiscal year 2017 that ends July 31, 2016. said that after the successful tender offer completion, Demandware shares, which were not tendered in the tender offer, would be converted in a second step merger into the right to get the same $75.00 per share in cash paid in the tender offer.

The CRM firm said that the acquisition is predicted to boost its fiscal year 2017 revenue by about $100 - $120 million reflecting about $50 million reduction in respect of the fair value adjustments to deferred revenue and unbilled deferred revenue. As far as earnings, the acquisition is expected to drag Non-GAAP earnings by about $0.07 a share in the fiscal year 2017. The company also expects standard integration costs and transaction fees of about $30 million.

For the second quarter of the fiscal year 2017, the transaction would boost Salesforce's revenue by about $0 - $10 million. Also, the company expects earnings to be reduced by $0.03 a share on an adjusted basis.

As a result of the acquisition, salesforce expects fiscal year adjusted earnings between $0.93 and $0.95 a share on revenue of $8.26 - $8.32 billion. Street analysts predict the CRM firm to earn $1.02 a share on revenue of $8.2 billion.

Commenting on the news, chairman and CEO, Marc Benioff, said, "Demandware is an amazing company—the global cloud leader in the multi-billion dollar digital commerce market. With Demandware, Salesforce will be well positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion dollar cloud."

Similarly, Demandware CEO, Tom Ebling, said, "Demandware and Salesforce share the same passionate focus on customer success. Becoming part of Salesforce will accelerate our vision to empower the world's leading brands with the most innovative digital commerce solutions that enable them to connect 1:1 with customers across any channel."

While CRM stock traded 2.03 percent down, DWRE shares jumped 56.15 percent in the pre-market trading on Wednesday.

Posted-In: Demandware Marc Benioff Tom EblingNews M&A Press Releases


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