Hedge fund Elliott Investment Management has taken a large activist stake in Salesforce Inc., making the move after layoffs and a stock swoon in the enterprise software giant.
Elliott, who often pushes for strategic changes and seeks board representation, took a multibillion-dollar stake in the company, according to people familiar with the matter. The San Francisco company’s market capitalization is now $151 billion, down from a peak of more than $300 billion in 2021.
“Salesforce is one of the world’s leading software companies, and after following the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built,” Jesse Cohn, Elliott’s managing partner, said in a statement. . “We look forward to working constructively with Salesforce to realize the value they deserve for their company.”
Benioff is the chairman and co-chief executive officer of Salesforce. Elliott did not disclose details of the investment, which was first reported by The Wall Street Journal, in its statement.
Paul Singer’s Elliott Raked in a Record $13 Billion Last Year
Elliott, who is involved in driving change in technology companies ranging from Paypal Holdings Inc., Pinterest Inc. until Western Digital Corp., is the second prominent activist investor in recent months to enter the stock. In October, Starboard Value took a stake in the company and said the company had trouble translating growth into profitability.
Salesforce said earlier this month it would cut about 10% of its workforce and reduce its real estate holdings, after hiring more people during the Covid pandemic as demand surged. The company, which employs about 80,000 people at the time, said it was adjusting to more cautious customer spending.
Salesforce has nearly tripled its workforce in the past four years, largely through dozens of acquisitions, including the 2021 purchase of Slack for $27.7 billion. From January 2020 to the end of October last year, the number of heads increased by more than 30,000.
“It’s not surprising to us,” Bloomberg Intelligence analyst Anurag Rana said of Elliott’s move. “Salesforce’s valuation has been declining since announcing the Slack acquisition and since then we’ve seen a decline in sales and several executive departures.”
Bret Taylor, who is the co-CEO of Salesforce, said last year that he would leave the company to return to entrepreneurial activities. Taylor has been seen as the obvious choice if Benioff ever quits Salesforce.
“It is now trading lower than pre-pandemic levels,” Rana added. “Elliott’s involvement can help management focus on organic sales growth and margin expansion. We will not be surprised if there are changes at the top as well, similar to what Microsoft did in 2013.
-With help from Tom Giles.
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