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October 24, 2017

Salesforce buys Demandware for $2.8B, taking a big step into e-commerce

Salesforce made its name originally with cloud-based software to help salespeople manage their leads and close deals; and today the company took a big step into the business of sales itself. Today the company announced that it would spend $2.8 billion to acquire Demandware, a cloud-based provider of e-commerce services to businesses big and small. The deal also will spearhead a new business division: the Salesforce Commerce Cloud.

Demandware went public in 2012, and Salesforce says that it will commence a tender offer for all outstanding shares of Demandware for $75.00 per share, in cash. This is a big premium on the company’s current valuation — which was $1.87 billion at close of trade yesterday. The transaction is expected to close in Salesforce’s Q2 2017, which ends July 31, 2016.

“Demandware is an amazing company—the global cloud leader in the multi-billion dollar digital commerce market,” said Marc Benioff, chairman and CEO, Salesforce, in a statement. “With Demandware, Salesforce will be well positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion dollar cloud.”

Something else “amazing” about Demandware: how it has grown. The company had raised a mere $54 million when it was still a startup, mostly from only three investors, by the looks of it. Its revenues in the last quarter, however, are more modest: according to its most recent quarterly earnings, reported at the end of April, revenues were only $67 million, with net loss just under $12 million, but the former is growing while the latter continues to shrink.

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