MULE Mulesoft Class A

By Austen Hufford and Jay Greene 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 21, 2018).

Salesforce.com Inc. is buying MuleSoft Inc. in a deal valuing the firm at $6.5 billion as Salesforce adds technology to help customers tap data from older computer systems as they move to the cloud.

MuleSoft's web-based service, Anypoint, lets developers connect multiple sources of data that run in their own data centers as well as on cloud services. That way, customers tap can tap that information to create new applications as well as helping them update their legacy applications and move them to the cloud. MuleSoft has more than 1,200 customers, including Coca-Cola Co. and Unilever NV, and has seen double-digit revenue growth in recent years.

Salesforce's president and chief operating officer, Keith Block, said the deal was driven, in part, from conversations with customer CEOs who complain that "data locked in their legacy systems is holding them back."

The deal is Salesforce's largest, topping the $2.8 billion acquisition of Demandware Inc. for $2.8 billion in 2016.

Salesforce reached a deal to buy MuleSoft for about $44.89 a share, composed of $36 in cash and 0.0711 share of Salesforce stock. The deal is a 36% premium over MuleSoft's closing share price Monday.

The deal opens new markets for Salesforce, finance chief Mark Hawkins said during a conference call with analysts. He said the deal will raise Salesforce's revenue target to $21 billion to $23 billion by its 2022 fiscal year, a $1 billion jump.

"We see significant revenue opportunity," Mr. Block said.

MuleSoft Chief Executive Greg Schott said he would remain CEO of the company after the merger closes.

Reuters reported earlier on Tuesday about deal talks, and shares in MuleSoft rose 27% during the trading day. Shares gained 4.4% to $43.85 in post-market trading after the deal was announced.

Shares of Salesforce, which rose 0.1% during Tuesday trading, fell 2.3% to $122.20 after hours.

Stockholders of MuleSoft owning about 30% of its shares have already agreed to support the deal, Salesforce said. The purchase is expected to close in Salesforce's fiscal second quarter, which ends July 31.

Salesforce said it would fund the transaction with both cash on hand and about $3 billion from loans and debt.

Write to Austen Hufford at austen.hufford@wsj.com and Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

March 21, 2018 02:47 ET (06:47 GMT)

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