Salesforce.com, a provider of Web-based sales management tools, has just announced that it will buy Buddy Media for about $689 million in cash, stock and securities. It is only the latest such move on the part of a high-tech firm as social media marketing becomes increasing crucial.
Broadening social media footprint
Buddy Media, which calls itself the world’s leading social media marketing platform, publishes and tracks the social media presence of such major brands as Ford, Hewlett Packard, L’Oreal and Mattel. Marc Benioff, the CEO of Salesforce, said the acquisition will help the company keep pace as it matures. Benioff also said it was selected because none of its competitors “were doing the kind of large transactions” that he observed at Buddy Media.
According to All Things Digital, Buddy Media took the offer from Salesforce over one from Google.
Workforce is reportedly shilling out about $467 million in cash, $184 million in stock, and $38 million in other securities. The deal is expected to finalize at the end of the third quarter on Halloween day, 2012.
Buddy Media was founded in 2007. Its CEO, Michael Lazerow, has previously co-founded and sold four other Web-based media firms. Some of its investors are venture capitalist Peter Thiel, SoftBank Capital, Mark Pincus of Zynga and WPP Plc.
Lowered projections lead to stock drop
Salesforce will lower its revenue projection over the year to accommodate the deal. Its stock, which was31 up 26 percent in 2012, fell 2.2 percent to $128.20 in trading Monday as an expression of disgruntled investors.
However, Salesforce says the acquisition will boost its revenue by $20 million to $25 million in the second half of 2013.
Kirk Materne of Evercore3 Partners said of the deal:
“While the $689 million price tag … is not cheap, we note that it values the company roughly in line with other recent deals in the social media marketing space.”
The latest such deal
In 2011, Salesforce also acquired Radian6 for about $326 million in cash and stock. It is another firm that tracks the cloud presence of clients. Salesforce plans to merge its capabilities with those of Buddy Media.
The deal also comes only a week after the announcement of a similar acquisition by Oracle Corp. for the marketing software firm, Virtue. Similar to Buddy Media, Oracle helps firms post and track activity on various social media platforms. Oracle is poised to announce its new enterprise cloud crunching strategy on June 6.
That deal cost Oracle $300 million, less than half of Saleforce’s current payout. Let there remain no doubt that social media marketing is the new big battleground for high tech firms.