Some items on our site have recently moved. Visit our News Hub for selected articles, special reports, podcasts and other resources.
Salesforce's buyout of Tableau may trigger unaccustomed scrutiny in EU
13 Jun 2019 12:00 am
Salesforce.com, a serial acquirer, has purchased dozens of companies with hardly a regulatory hiccup. That may be about to change.
The sheer size of its $15.7 billion takeover of Tableau Software, combined with growing unease about “killer” acquisitions, could expose this deal to serious competition scrutiny in Europe.
That would mark a significant change for Salesforce, the world’s top seller of software for managing customer relationships. Although co-founder Marc Benioff’s tech buying spree is legendary, his biggest previous deal — the $6.5 billion buyout of integration software maker MuleSoft — flew under the radar of EU merger officials.
A probe would also highlight the gulf between a hot theory in antitrust circles and a fact of economic life in Silicon Valley.
Regulators fret that big-tech orcas are swallowing promising minnows — “killing” them before they become serious competitive threats. But the West Coast software set doesn’t see it that way. In their view, the likes of Google and Facebook provide smart startups with an exit, allowing them to cash in without the hassle of going public through an initial public offering. That’s just how things work.
San Francisco-based Salesforce announced this week that it had struck an all-stock deal to buy Tableau, a Seattle outfit whose software turns reams of numbers into comprehensible charts and graphs.
“Tableau’s sole mission is to help people see and understand data,” Benioff said during a call with analysts.
The deal is seen in some quarters as a recognition that Salesforce’s own “business intelligence” product, Wave, had fallen short.
The news follows Google’s move into the data-visualization market with a $2.6 billion purchase of Looker.
The Salesforce takeover may draw the attention of European antitrust regulators for three reasons.
For starters, the deal might require notification under EU merger rules, which cover concentrations among companies whose combined annual sales exceed 5 billion euros worldwide ($5.6 billion today) and whose individual sales exceed 250 million euros in the bloc.
The two companies breeze past the global threshold: Revenue hit $13.3 billion at Salesforce and $1.16 billion at Tableau during the companies’ latest reporting years. Salesforce meets the EU threshold, too, with European revenue of $2.55 billion in fiscal 2019, but the picture is foggier at Tableau.
Tableau counts the likes of Lufthansa, BNP Paribas and Telefonica as clients and generated 31 percent of its 2018 sales “outside the United States and Canada,” according to the company’s latest annual report. That came to about $360 million, though it’s unclear how much was in the EU.
If the Tableau deal falls short of the EU thresholds, it could come under review in jurisdictions such as Germany and Austria, which have introduced value-based thresholds designed to catch killer acquisitions.
A third possibility is that Salesforce might choose to ask the European Commission to review the merger if it faces separate filings in at least three EU countries. That’s what Facebook opted to do when confronted with the risk of separate national reviews of its buyout of WhatsApp.
Competition enforcers and economists have voiced concerns about the pace at which Silicon Valley stalwarts acquire hundreds of startups.
“Google bought 270 companies in the last 17 years,” commission chief economist Tommaso Valletti said in December. That averaged out to one acquisition every three weeks, he said.
The theory is that incumbents are killing potential rivals before they become a threat — and before the deals become reportable.
In response to these concerns, Germany and Austria have added a “deal value” component to their merger-control systems, requiring companies to file a merger to the national authority if two conditions are met: Its value exceeds 400 million euros in Germany or 200 million euros in Austria, and there’s a sufficient link to the respective market.
So far, little has come of the change. The new threshold has led to just over 30 additional cases reviewed in Germany since it came into force on June 9, 2017, Bundeskartellamt President Andreas Mundt said last month. So far, the revision has “not played a very big role” in the authority’s scrutiny of deals, he said.
One deal that might have conceivably been caught by the rule change was Salesforce’s $6.5 billion buyout of MuleSoft, announced in March 2018. But that deal doesn’t appear on the Bundeskartellamt database, a spokesman says.
25 Feb 2021 12:00 am by Simon ZekariaApple and Samsung may be tapped for data on the market for smartphone chips to assist a planned UK mass damages lawsuit against Qualcomm.
A highly anticipated EU report on standard-essential patents has laid bare the problem: There's no sign of peace.