From an email to a $6.5 billion deal in 46 days: How Salesforce's bid for MuleSoft came together (CRM, MULE)

CEO of Salesforce Marc Benioff

Salesforce's deal to buy MuleSoft for $6.5 billion came together rapidly, a regulatory document made public on Monday shows.
The filing confirms there was no bidding war for MuleSoft, despite speculation from analysts.
Instead, during the less than two months of negotiations, MuleSoft CEO Greg Schott pressured his counterpart at Salesforce, Marc Benioff, into a higher price tag and a quick turnaround.

If it seemed as if Salesforce's $6.5 billion deal to buy MuleSoft came out of thin air, it's because it did.

The companies hadn't discussed the possibility of an acquisition before February, according to a regulatory document filed by Salesforce on Monday.

Salesforce and MuleSoft signed the deal early last month and made it public on March 20, less than two months — 46 days — after they started talking about a strategic alliance.

Despite speculation from analysts, Salesforce wasn't engaged in a bidding war for MuleSoft — no other company was competing to buy it, the regulatory document shows. Instead, the price reflects MuleSoft CEO Greg Schott's willingness to play hardball and Salesforce CEO Marc Benioff's inclination to spend big on what he wants.

Since Salesforce and MuleSoft announced the deal, Wall Street analysts and investors have questioned its size and speed. Salesforce is planning to pay a 32% premium for MuleSoft compared with its valuation on March 7, the day before the price was set.

By some estimates, the deal would be the largest acquisition in the history of the software industry. Regardless, it would be Salesforce's biggest-ever purchase by a long shot.

Here's how the deal went down

Before striking the deal, Salesforce was looking for a way to make better use of its customer data. The company had a longstanding relationship with MuleSoft, which sells software to gather data across a variety of applications and databases. Salesforce even participated in MuleSoft's private fundraising rounds between 2013 and 2017, when MuleSoft went public.

But the two companies hadn't discussed a potential acquisition until February 2, when John Somorjai, Salesforce's executive vice chairman, emailed Schott to discuss "joint business development ideas," the filing says.

The two companies went back and forth for a few weeks until Salesforce made an offer on March 5. The company proposed buying MuleSoft for $38 a share, composed of 50% cash and 50% Salesforce stock.

Sensing his upper hand, Schott called Benioff to say it would take more than that for MuleSoft to sell.

On March 7, MuleSoft made a counteroffer, proposing Salesforce pay $45 a share and giving Benioff a deadline of the week of March 19 to announce the deal. Additionally, the MuleSoft board pushed for an all-cash offer.

While MuleSoft didn't get an all-cash agreement, it got everything else.

In the final terms, which the companies reached on March 8, Salesforce agreed to pay $45 a share, 80% in cash and 20% in Salesforce stock.

The companies met several more times to go over logistics with their banks and legal teams before signing the deal and making it official after the markets closed on March 20.

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