Activist Elliott takes a multi-billion dollar stake in Salesforce

(Bloomberg) — Hedge fund Elliott Investment Management has acquired a large activist stake in Salesforce Inc. , after layoffs and a deep faint in the giant enterprise software company.

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said Jesse Cohn, managing partner at Elliott, referring to the co-CEO and chairman of the board. “We look forward to working constructively with Salesforce to realize the value of a company.”

Elliott’s estate is a multi-billion dollar stake, according to a person familiar with the matter who asked not to be identified because the details are private. San Francisco-based Salesforce’s market capitalization was $151 billion at the close Friday, down from a peak of more than $300 billion in 2021.

The move by Elliott Paul Singer — which often pushes strategic changes and seeks board representation — adds activist pressure on Salesforce to boost earnings and shareholder returns after a half-decade of rapid hiring and big acquisitions, including the purchase of Slack in 2021 for 27.7%. Billion dollar. Salesforce said this month that it has reduced its real estate footprint and cut 10% of its workforce, which has nearly tripled in the past four years.

Salesforce shares were up about 4.2% in pre-market trading Monday in New York.

Benioff said earlier this month that customers are taking a “more informed approach to their purchasing decisions,” and noted that “the economic environment remains challenging.” Salesforce’s revenue in the third quarter rose 14% from a year earlier to $7.84 billion, but that was a sharp slowdown from the pace of growth a year earlier and analysts expect only a 9% increase in sales in the fourth quarter.

Elliott’s stake in Salesforce also comes at a time when the business as a whole is returning to some sectors globally. Bloomberg data shows that the 177 activist campaigns announced worldwide in the most recent quarter were the most since 2018. Salesforce joins The Walt Disney Company and Bayer AG among the most prestigious companies targeted by activists. Elliott’s statement did not disclose the details of his investment, which was first reported by the Wall Street Journal. Salesforce declined to comment.

Elliott Paul Singer made a record $13 billion last year

Elliott, which has been involved in pushing changes at technology companies ranging from PayPal Holdings Inc. and Pinterest Inc. to Western Digital Corp. , is the second notable activist investor in recent months to enter the stock. In October, Starboard Value took a stake in the company and said it had problems translating growth into profitability.

“It’s not surprising to us,” Bloomberg Intelligence analyst Anurag Rana said of Elliott’s move. “Salesforce’s valuation has fallen since it announced its acquisition of Slack and since then we’ve seen slowing sales and multiple executive departures.”

Brett Taylor, who was the co-CEO of Salesforce, said last year that he was leaving the company to return to entrepreneurial activities. Taylor was seen as the obvious choice if Benioff stepped aside at Salesforce.

“It is now trading at levels much lower than pre-pandemic levels,” Rana added. “Elliott’s involvement can help management focus on both organic sales growth and margin expansion. We wouldn’t be surprised if there’s a shakeup at the top as well, similar to what Microsoft went through in 2013.”

— with assistance from Tom Giles and Brody Ford.

(Updates posts in the fifth paragraph.)

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