Customer relationship management giant Salesforce.com Inc. early today said it’s buying Tableau Inc. in a blockbuster all-stock deal valued at $15.7 billion.

The news comes just four days after Google LLC announced plans to acquire Tableau rival Looker Data Sciences Inc. for $2.6 billion. The deals signal a new front in intensifying competition among various cloud computing players, from leaders Amazon Web Services Inc. and Microsoft Corp. to newly energized Google LLC and now Salesforce.

Salesforce will exchange 1.103 shares of its common stock for each share of Tableau, representing a 45% premium to Tableau’s $10.8 billion market capitalization. Tableau shares leaped nearly 36% in early trading on the New York Stock Exchange.

Salesforce said the deal, which is expected to close in the third quarter, will add between $350 and $400 million to fiscal 2020 revenues, which are now expected to come in at $16.45 billion to $16.65 billion. The deal is expected to narrow operating margins by 0.75%.

“We are fast-tracking a company that will become a $30 billion powerhouse in enterprise software,” said Salesforce Chief Executive Marc Benioff on a call with analysts this morning.

Salesforce’s shares, which trade under the ticker symbol CRM, fell a sizable 5% today, perhaps thanks to the size of the acquisition and the impact on profit margins. But analysts generally said the deal would be positive for Salesforce.

“While not inexpensive at more than 11 times 2019 estimate revenue, the price is not unreasonable for a high-quality, strategic asset with a clear opportunity to cross-sell into CRM’s installed base,” Mizuho Bank analyst Gregg Moskowitz wrote in a note to clients.

Tableau will operate independently under its own brand and remain headquartered in Seattle. Salesforce said the current management team will be kept in place.

Founded in 2003, Tableau broke out of a crowded business intelligence field with a strategy of enabling users to combine data from multiple sources into rich and easily shared visualizations. The company claims 86,000 customers around the world and more than 650,000 people have published visualizations on its community platform.

“Tableau is all about people seeing and understanding their data. Salesforce is all about helping people engage with and understand customers,” Benioff said. “Together, we have the leading products in these most important categories underlying digital transformation.”

“Tableau will accelerate our ability to deliver customer success by enabling a truly unified and powerful view across all of a customer’s data,” Keith Block, co-chief executive of Salesforce, said in a prepared statement.

While the size of the deal may turn some heads, the all-stock transaction leverages Salesforce’s strong share price to gain access to a large existing customer base, said Jeff Kaplan, managing director of THINKstrategies Inc., a consulting firm that specializes in on-demand computing services. “Rather than make a big bet on a startup with promising but untested solutions and market scalability, Salesforce is acquiring a proven player with well-established products and solid customers,” he said.

Coming on the heels of Google’s Looker acquisition announcement, the news foreshadows further consolidation in the BI market, said Boris Evelson, vice president and principal analyst at Forrester Research Inc. “BI capabilities have matured and become commoditized,” he said. “It’s hard to compete with Microsoft [Corp.] and Oracle [Corp.] discounting enterprise BI to under $5 per user per month in large deals.”

Turnaround tale

Although Tableau has recently traded near its all-time high, the company’s recent financial history has been rocky. It struggled with the transition from license to subscription revenue as it lagged in shifting to the cloud.

The company’s stock crashed in late 2015, falling 50% in a single day on a disappointing earnings outlook. The stock price remained in the doldrums for a year but, under new CEO Adam Selipsky (pictured), began climbing again in mid-2017 as the shift to a subscription model began to bear fruit.

Image: Salesforce.com

Although Salesforce’s software-as-a-service business runs entirely in the cloud, Tableau’s legacy on-premises business was part of the company’s appeal because it gives customers the choice of running as a SaaS service, as a public cloud application or on-premises, Benioff said. “It offers customers tremendous flexibility,” he said. “One of the things that attracted us to Tableau was its approach to the cloud.” Tableau has 10,000 customers for its SaaS service, Selipsky said.

Salesforce said Tableau will be a valuable addition to its “customer 360” omnichannel sales and marketing initiative (pictured) and fits nicely with its $6.5 billion acquisition of data integration firm MuleSoft Inc last year.

“MuleSoft coming together with Tableau is a beautiful thing,” Benioff said. “Tableau will have access to all these data sources. I can’t wait to see what they can do there.”

Forrester’s Evelson said the deal will boost Salesforce’s already strong business intelligence capabilities and give it a foot at companies that use Tableau atop enterprise resource planning and competitive CRM products from companies like Oracle, SAP SE, IBM Corp. and Microsoft. “It’s a great move for Salesforce,” he said.

The combination of MuleSoft, Tableau and Salesforce’s Einstein artificial intelligence-based sales assistant will create a foundation for the drive toward digital transformation, said Salesforce President Bret Taylor. “We can enable everyone participating in digital transformation to be literate in data,” he said.

Photo: Tableau