A press release from the enterprise software company says it has a deal to buy the five-year-old social media marketing company for $689 million in cash and stock.
(Update: Salesforce has already started bumping up the official price: Its 8-K filed this morning lists the “total consideration” for Buddy Media at $745 million; it also refers to the employee retention program but I can’t see a dollar value listed there. A Facebook post from Buddy Media CEO Mike Lazerow says he sold the company for $745 million “plus cash and some other stuff.”)
- The deal is scheduled to close at the end of October.
- Salesforce says the deal will boost its revenues for the second half of its 2013 fiscal year, which ends January 31, 2013, by $20 million to $25 million. On the call, Salesforce.com CEO Marc Benioff said his guidance for Buddy Media’s effect on his top line slightly understates Buddy Media’s revenue. To be conservative, let’s assume that means the company is going to do $40 million in revenue this year. Using the SEC-reported $745 million purchase price, that puts the deal at a 19x revenue multiple. If you’re more generous, and assume a $50 million year, that gets you down to 15x.)
My Reaction integration and efficiency moves such as this will continue. One has to wonder though what was it about Buddy Media that Salesforce had to have? Was this purely buying some talent? Are we in a social media and social CRM bubble? Let me know your thoughts in the comments below.