Summary
Salesforce, Inc. (CRM) filed an 8-K on August 1, 2016, primarily announcing its agreement to acquire Quip, Inc., a productivity and collaboration platform, for an estimated $582 million. The transaction is expected to be completed in CRM's third fiscal quarter of 2017 and will be settled through the issuance of Salesforce common stock. The number of shares to be issued will be based on a volume-weighted average price, with a floor and ceiling to manage potential stock price volatility. This acquisition signals Salesforce's continued strategy of inorganic growth to enhance its product offerings and expand its market reach. Additionally, the filing disclosed unregistered sales of equity securities. These include shares issued as consideration for recent acquisitions completed after Q1 FY17 and shares issued under the Company's Employee Stock Purchase Plan (ESPP). The sales under ESPP occurred at a discount to market value, consistent with the plan's terms. Investors should note the potential dilution from the stock issuance for the Quip acquisition and the ongoing use of equity as consideration for strategic M&A.
Key Highlights
- 1Agreement to acquire Quip, Inc., a next-generation productivity and collaboration platform, for an estimated $582 million in Salesforce common stock.
- 2Acquisition expected to close in Salesforce's third fiscal quarter ending October 31, 2016.
- 3Stock issuance for Quip acquisition subject to a price collar, with shares determined by the 20-day VWAP, not less than $73.81 or more than $90.22.
- 4Estimated issuance of 6.47 million to 7.91 million Salesforce common shares for the Quip acquisition.
- 5Disclosure of unregistered sales of equity securities, including shares issued for recent acquisitions and under the Employee Stock Purchase Plan (ESPP).
- 6Shares issued under ESPP occurred at a discount to fair market value, as per plan terms.