Salesforce: Acquiring Informatica to Bolster AI Offerings

Key Morningstar Metrics for Salesforce

• Fair Value Estimate: $315
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

Salesforce Stock Update

Salesforce CRM has entered into an agreement to acquire Informatica for $25 per share, or approximately $8 billion, which excludes the portion of the firm that Salesforce does not already own. The transaction is expected to close in fiscal 2027.

Why it matters: This is the first substantial deal for Salesforce since it acquired Slack in July 2021. Salesforce was reportedly in talks to acquire Informatica in April 2024. Our reaction to that was skewed negatively because Informatica grows more slowly and earns lower margins than Salesforce.

• We see the strategic value of the deal and appreciate the lower purchase price relative to indications of $10 billion-$13 billion a year ago. An $8 billion deal price equates to 3% of Salesforce’s market cap, which is generally not material.
• We believe that the Slack deal significantly contributed to the shareholder revolt that led to substantial changes within Salesforce, including significantly higher operating margins, lower stock-based compensation, increased share buybacks, a quarterly dividend, and lower acquisition activity.

The bottom line: Our fair value estimate for wide-moat Salesforce is unchanged at $315 per share. We clearly see the strategic rationale for combining Informatica’s data integration platform with Salesforce’s own data cloud, but we acknowledge top- and bottom-line dilution.

• We are upbeat about strategy, as this transaction is likely to reinforce Salesforce’s AI platform. The company’s MuleSoft acquisition made it easier for customers to connect applications, and this deal would be along similar lines, in our view.
• While we see no immediate change to our long-term thinking on Salesforce, the timing of the deal can potentially tilt negative on how the April quarter unfolded, but the market seems to be shrugging off the acquisition.

Coming up: Salesforce reports first-quarter earnings for fiscal 2026 tomorrow after the close, when we expect to hear details from management surrounding the acquisition.