On Tuesday, Salesforce agreed to buy publicly traded cloud software company MuleSoft at $44.89 per share — a whopping $6.5B valuation in total.
That’s 16 times MuleSoft’s expected revenue in 2018, a price tag analysts are calling “lofty“ (‘Software as a service’ companies are typically valued at 10x their annual recurring revenue).
What the frig is MuleSoft?
MuleSoft sells software that helps companies share data across different systems, including those existing in “on-premises” data centers.
The company is a great pairing for Salesforce, which will need access to data across the company to build out their AI and machine learning layer Einstein.
The acquisition (expected to close by the end of July) also gives Salesforce access to big MuleSoft customers like Coca-Cola, VMware, GE, AT&T, and Cisco.
Things just got a lot more complicated
This is the most expensive cloud software deal in history, and it could set the precedent for cloud software acquisitions moving forward.
Some analysts speculate the exorbitant price is the result of a bidding war among Salesforce, Google, Microsoft, Oracle, and SAP — and if that’s the case, the competition’s only gonna get fiercer from here.
Expensive for the cloud giants looking to gobble up complementary software, and great for the cloud companies on the menu.