Salesforce’s $15.7 billion acquisition of Tableau Software came together after nearly six months of back-and-forth negotiations, and the companies didn’t agree on major details — including how much Tableau was worth — until a few days before the deal was announced.
That is one of the previously unreported details in a new filing with the U.S. Securities and Exchange Commission on Wednesday morning. The filing lays out the timeline and details of the negotiations between the two companies that led to an all-stock deal for the Seattle-based data visualization company. It paints a picture of tough negotiators on both sides who were determined to get a deal done, despite a months-long impasse over Tableau’s valuation.
Salesforce co-CEO Marc Benioff and Tableau CEO Adam Selipsky played key roles in the discussions, the filing shows. As the two sides were getting close to an agreed upon announcement date, Selipsky unexpectedly had to leave the state to deal with a personal matter, according to the filing. Salesforce was still doing its homework on the deal as well, and just a few days before the deadline the two companies pushed the timeline back a week to sort out the final details.
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The filing also reveals for the first time how much it will cost Tableau if the company decides not to go through with the merger and instead agree to be acquired by another company. Salesforce would have an opportunity to match, and Tableau would have to pay a $552 million “break-up fee” should it take another offer.
Tableau kept details of the discussions close to the vest, not talking to too many third parties for fear of blowing up the deal and the potential for leaks. Salesforce attempted to lock Tableau into exclusive negotiations early on the process, but the company resisted, seemingly wanting to keep its options open to other potential acquisition partners.
However, there is no indication in the filing that Tableau solicited or received other offers during the negotiations. Microsoft, which competes with Tableau through its Power BI software, would have been another logical bidder, but Selipsky previously declined to say whether the Redmond company or others made any offers.
Salesforce first approached Tableau in December 2018 when John Somorjai, executive vice president of corporate development and Salesforce Ventures, reached out to Selipsky to set up a meeting. Less than two weeks later, Benioff and Selipsky met for what be the first of many encounters during the negotiation process.
Salesforce made its first formal offer in February, but the Tableau board quickly rejected it saying it undervalued the data visualization company. Over the next four months, leaders of the companies presented a flurry of proposals before ultimately coming to terms in early June.
Just four days before the deal was announced, Salesforce dropped its offer below an agreed upon valuation range due to volatility in the stock market, according to the filing. Such a move could have easily torpedoed the deal, but the two companies continued to talk it out before settling on a valuation of $175 per share for Tableau. The resulting acquisition price of $15.7 billion was a premium of more than 45 percent over Tableau’s market value of $10.8 billion as of the previous stock market close.
Here’s a look at the timeline of the negotiations and how the deal came together, according to the filing:
- Salesforce started the dialog back in December 2018. John Somorjai, Salesforce executive vice president of corporate development and Salesforce Ventures, reached out to Selipsky to set up a meeting.
- Twelve days after the initial meeting, Selipsky sat down with Benioff. At this meeting, Benioff raised the possibility for the first time of a “strategic transaction” that “could present a potentially compelling opportunity for the two companies.”
- Selipsky told Benioff he would pass along the proposal to Tableau’s board. Benioff showed Salesforce was serious about a deal, following up a few weeks later with more details.
- On Jan. 24, Tableau’s leadership team got the go-ahead from the board of directors to continue acquisition discussions with Salesforce. The board assigned directors John McAdam, the former F5 CEO, and Brooke Seawell, a veteran tech executive who now serves as a venture partner with the investment firm New Enterprise Associates, to lead a “transaction committee” to work on the negotiations.
- On Feb. 12, Salesforce made its first offer: An all-stock deal at a valuation of $157 per share, a 25 percent premium on Tableau stock at the time that valued the company at roughly $14.1 billion. Two days later, Tableau’s board rejected the proposal, instructing leadership to tell Salesforce that “any offer for a strategic combination would need to be significantly higher to warrant further engagement,” according to the filing.
- Salesforce wasn’t about to let the negotiations crumble, and nine days later it increased its offer to $170 per share. This offer too undervalued Tableau, the board concluded, but the two sides were determined to figure it out, so they negotiated a confidentiality agreement to continue discussions.
- On March 20, following a series of meetings, Tableau came back with a deal at $190 per share. Salesforce quickly countered with an offer of $177 per share. At this point, Salesforce sought to lock Tableau into exclusive negotiations. Tableau refused, and it would be two months before the two companies signed an exclusivity agreement.
- In the following weeks, the two companies batted proposals back and forth, and executives continued to discuss the details, including an April 4 meeting in Seattle between Benioff and Selipsky.
- For months, the companies were at an impasse over valuation, and volatility within the stock market created another hurdle. On May 16, Tableau representatives pitched a “floating value” of $175 to $180 per share. Later that day, Salesforce agreed to that plan, submitting a written proposal and setting a deadline to announce the deal on June 4. At this point, Tableau agreed to negotiate exclusively with Salesforce.
- Toward the end of May, Selipsky told Benioff he needed to leave the state for a personal matter. Though Benioff was determined to get the deal done quickly, he agreed to push the timeline back a few days. Between Selipsky’s absence and Salesforce continuing its due diligence, the companies delayed the exclusivity agreement a week to June 11.
- Salesforce dropped its valuation of Tableau to $170 per share on June 6 because of “changes in market conditions” and “the competitive landscape” since the companies agreed on a range of $175 to $180 three weeks prior. The Tableau board balked the next day and Salesforce agreed to push its offer up to $175.
- With the biggest long-term hurdle of valuation figured out, both sides spent the next two days ironing out the fine details. On June 9 the Tableau board met and gave its blessing. The next day, the two companies announced the deal.
The deal would be the largest acquisition in the history of the San Francisco-based cloud giant, more than double the $6.5 billion Salesforce paid for MuleSoft last year. The acquisition came just days after Google announced its $2.6 billion acquisition of Looker, which makes business-intelligence software for data analysis.
The deal is expected to close in the third quarter. Following the acquisition, Tableau will remain headquartered in Seattle, operating independently under the Tableau brand, and led by Selipsky.
Benioff has long sought to make the Seattle area a strategic part of Salesforce, and following the announcement of the deal he proclaimed the region as the company’s HQ2. A GeekWire analysis found that the combined companies will have more than 3,100 employees in the Seattle region and collectively occupy north of 650,000 square feet of office space.
The filing also lays out why Tableau was interested in a deal. The acquisition arms Tableau with more resources to expand its product offerings and better compete in a fiercely contested market. The two companies’ cultures complemented one another, and Salesforce’s strong track record of integrating acquisitions also played a part in Tableau’s decision.
The document gives insight into Tableau’s financial projections all the way out to 2033. Over the next five years, Tableau expects revenue to increase by 183 percent to more than $4 billion. By the end of the projection period in 2033, Tableau expects revenue to top $11 billion, an increase of more than 700 percent over its 2019 projections.