Salesforce (NYSE:CRM) stock is trending and advancing on news that the conglomerate’s talks about a potential takeover of Informatica (NASDAQ:INFA) appear to have stalled. The two sides reportedly have come to an impasse regarding differences in the price of the potential deal. Last week, CRM stock fell after news of the possible transaction surfaced because investors were concerned over its size and price tag.
Informatica, a provider of data analysis and data management tools, was reportedly going to be acquired by CRM for about $10 billion.
An Impasse Over Price
Bloomberg reported this morning, citing an unnamed source, that Salesforce and Informatica have been unable to agree on the price Salesforce would pay for Informatica. Last night, The Wall Street Journal stated that the negotiations had “fizzled” without providing further detail.
CRM was reportedly ready to pay around $35 per share for Informatica. Last Friday, INFA stock closed at $35.19. On April 12, the last trading day before the news of the potential deal surfaced, the shares finished at $38.48.
Salesforce May Be Trying to Calm Its Investors
On April 19, CRM stock finished at $270.37, down nearly 10% for the week. As a result, it’s safe to say that the Street was displeased by the large potential deal. Over the last 12 months, the conglomerate has had to deal with “at least five activist investors” who were unhappy with its previous takeovers. Moreover, the firm sought to appease those activists by shutting down its mergers and acquisitions (M&A) committee and seeking to boost its bottom line.
It’s quite possible that the activists reacted very negatively to the proposed Informatica deal, while Salesforce was perturbed by the sizeable decrease in CRM stock after the news of the potential deal broke.
Those responses may have led Salesforce to push Informatica to accept a significantly lower takeover price. Consequently, the data-analysis firm might have decided to walk away from the talks, but I wouldn’t be terribly surprised if a deal is eventually concluded at a lower price.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
