Salesforce is buying Tableau in a $15.7 billion all-stock deal

Salesforce, one of the world's leading CRM platforms, is buying data visualization software Tableau in an all-stock deal worth $15.7 billion. The news comes just days after it emerged that Google is buying one of Tableau's competitors in the data visualization market, Looker.

Taken together, the stories highlight the importance of analytics to some of the planet's biggest companies. They suggest that despite years of the big data revolution, it's only now that market-leading platforms are starting to realise that their customers want the level of capabilities offered by the best in the data visualization space.

Salesforce shareholders will use their stock to purchase Tableau. As the press release published on the Salesforce site explains "each share of Tableau Class A and Class B common stock will be exchanged for 1.103 shares of Salesforce common stock, representing an enterprise value of $15.7 billion (net of cash), based on the trailing 3-day volume weighted average price of Salesforce's shares as of June 7, 2019." The acquisition is expected to be completed by the end of October 2019.

https://twitter.com/tableau/status/1138040596604575750

Why is Salesforce buying Tableau?

The deal is an incredible result for Tableau shareholders. At the end of last week, its market cap was $10.7 billion. This has led to some scepticism about just how good a deal this is for Salesforce. One commenter on Hacker News said "this seems really high for a company without earnings and a weird growth curve. Their ticker is cool and maybe sales force [sic] wants to be DATA on nasdaq. Otherwise, it will be hard to justify this high markup for a tool company."

With Salesforce shares dropping 4.5% as markets opened this week, it seems investors are inclined to agree - Salesforce is certainly paying a premium for Tableau. However, whatever the long term impact of the acquisition, the price paid underlines the fact that Salesforce views Tableau as exceptionally important to its long term strategy.

It opens up an opportunity for Salesforce to reposition and redefine itself as much more than just a CRM platform. It means it can start compete with the likes of Microsoft, which has a full suite of professional and business intelligence tools. Moreover, it also provides the platform with another way of potentially onboarding customers - given Tableau is well-known as a powerful yet accessible data visualization tool, it create an avenue through which new users can find their way to the Salesforce product.

Marc Benioff, Chair and co-CEO of Salesforce, said "we are bringing together the world’s #1 CRM with the #1 analytics platform. Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It’s truly the best of both worlds for our customers--bringing together two critical platforms that every customer needs to understand their world.”

Tableau has been a target for Salesforce for some time. Leaked documents from 2016 found that the data visualization was one of 14 companies that Salesforce had an interest in (another was LinkedIn, which would eventually be purchased by Microsoft).

Read next: Alteryx vs. Tableau: Choosing the right data analytics tool for your business

What's in it for Tableau (aside from the money...)?

For Tableau, there are many other benefits of being purchased by Salesforce alongside the money. Primarily this is about expanding the platform's reach - Salesforce users are people who are interested in data with a huge range of use cases. By joining up with Salesforce, Tableau will become their go-to data visualization tool.

"As our two companies began joint discussions," Tableau CEO Adam Selipsky said, "the possibilities of what we might do together became more and more intriguing. They have leading capabilities across many CRM areas including sales, marketing, service, application integration, AI for analytics and more. They have a vast number of field personnel selling to and servicing customers. They have incredible reach into the fabric of so many customers, all of whom need rich analytics capabilities and visual interfaces... On behalf of our customers, we began to dream about we might accomplish if we could combine our ability to help people see and understand data with their ability to help people engage and understand customers."

What will happen to Tableau?

Tableau won't be going anywhere. It will continue to exist under its own brand with the current leadership all remaining, including Selipsky.

What does this all mean for the technology market?

At the moment, it's too early to say - but the last year or so has seen some major high-profile acquisitions by tech companies. Perhaps we're seeing the emergence of a tooling arms race as the biggest organizations attempt to arm themselves with ecosystems of established market-leading tools. Whether this is good or bad for users remains to be seen, however.