Salesforce merger is a bad idea, says Informatica co-founder

By Jon Swartz

Salesforce's integration of Informatica's technology would be 'a complex, time-consuming project' that could take more than five years, according to Gaurav Dhillon

A rumored pairing of Salesforce Inc. and Informatica Inc. is a bad match, insists one of Informatica's co-founders.

In an interview with MarketWatch on Tuesday evening, Gaurav Dhillon - who co-founded software developer Informatica (INFA) in 1993 and is now chief executive of software company SnapLogic - called the potential deal a "real step backwards" for Salesforce (CRM) and said it would lay a "rocky road ahead for Informatica customers due to the significant overlap in integration products."

"With two disparate platforms, Salesforce now has to navigate merging MuleSoft's technology with Informatica's technology - a complex, time-consuming project that will likely take more than five years to complete," Dhillon said.

Dhillon considers the potential purchase of Informatica an unnecessary overlap with MuleSoft, which Salesforce acquired for $6.5 billion in 2018. Salesforce's motivation to buy Informatica, he said, is a brazen attempt to "bulk up revenue and engineering."

"Salesforce is getting away from its strength," according to Dhillon. "It is a U-turn for its strategy."

Representatives for Salesforce and Informatica both declined to comment on Dhillon's assessment of a merger between the two companies.

Dhillon added that Salesforce's acquisition of Informatica would be "massive validation and an 'I-told-you-so' moment for SnapLogic, a company that was founded on the premise that one unified platform is needed for application and data integration." He noted that Adobe Inc. (ADBE), AstraZeneca (UK:AZN) (AZN) and Sony Group Corp. (SONY) are among SnapLogic's customers.

While some analysts believe a pairing with Informatica will aid Salesforce in its bid to help companies run artificial-intelligence queries on their troves of data, others see serious flaws, which have helped send Salesforce shares down since news emerged of a potential deal.

Read more: Opinion: How Salesforce's potential Informatica deal is an unwelcome flashback to its old ways

"We question if potential revenue synergies can be realized," Guggenheim Securities analyst John DiFucci said in a note to clients last week. "Salesforce has a mixed M&A integration track record. Also, Informatica would lose its 'Switzerland' status, which is important to its customers.

"Lastly, Informatica competes directly with MuleSoft, and potentially Tableau to a lesser extent," DiFucci added, referring to two of Salesforce's other products that it has acquired in recent years.

-Jon Swartz

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04-17-24 1856ET

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