Demandware will become the foundation of a 'billion dollar cloud' for Salesforce, company head Marc Benioff says.

Mitch Wagner, Executive Editor, Light Reading

June 1, 2016

2 Min Read
Salesforce Scoops Up Demandware for $2.8B

Salesforce is getting into enterprise cloud e-commerce with its $2.8 billion acquisition of Demandware.

With the deal, Inc. extends from its mainstay enterprise CRM to e-commerce, providing a service in hot demand for retailers that are struggling to integrate web, mobile, social and in-store channels into a unified experience for customers. That's what Demandware does for companies including Lands' End, L'Oreal and Marks & Spencer.

The deal positions Salesforce to create "yet another billion dollar cloud" in the Salesforce Commerce Cloud, Marc Benioff, Salesforce chairman and CEO, said in a statement from the two companies Wednesday.

Salesforce will pay $75 cash per share in the deal for the 12-year-old company, which has enjoyed better than 30% sales growth over the last ten quarters. The sale is expected to close July 31, and the sale price is a premium of 56% over the Tuesday closing price.

Benioff told CNBC's Jim Cramer that the M&A market is extremely competitive.

Demandware will incorporate artificial intelligence (AI), which Benioff told Cramer is the next big, transformative business technology, following cloud, social and mobile. AI will be integrated into every part of Salesforce, the CEO said.

Want to know more about the cloud? Visit the Light Reading Enterprise Cloud site.

The deal ratchets up competition between Salesforce and Oracle Corp. (Nasdaq: ORCL), which has its own e-commerce technology and services. Until now, that was lacking for Salesforce, and it's still lacking for Adobe Systems Inc. (Nasdaq: ADBE).

The deal potentially puts Salesforce in competition with Inc. (Nasdaq: AMZN)'s retail arm. But the two companies are also allies; last week, Salesforce named Amazon Web Services Inc. its "preferred public cloud infrastructure provider" in a four-year deal believed to be worth $400 million. (See Salesforce Inks Strategic Cloud Deal With Amazon.)

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About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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