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Salesforce buys Demandware for $2.8B, taking a big step into e-commerce

TechCrunch TechCrunch 1/06/2016 Ingrid Lunden

Salesforce made its name originally with cloud-based software to help salespeople manage their leads and close deals; and today the company took a big step into the business of sales themselves. Today the company announced that it would spend $2.8 billion to acquire Demandware, a cloud-based provider of e-commerce services to businesses big and small, which will spearhead a newer business area: the Salesforce Commerce Cloud.

Demandware is a publicly-traded company, and Salesforce says that it will commence a tender offer for all outstanding shares of Demandwarefor $75.00 per share, in cash. This is a big premium on the company’s current valuation — which was $1.87 billion at close of trade yesterday. The transaction is expected to close in Salesforce’s Q2 2017, which ends July 31, 2016.

“Demandware is an amazing company—the global cloud leader in the multi-billion dollar digital commerce market,” said Marc Benioff, chairman and CEO, Salesforce, in a statement. “With Demandware, Salesforce will be well positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion dollar cloud.”

“Demandware and Salesforce share the same passionate focus on customer success,” said Tom Ebling, CEO, Demandware, also in a statement. “Becoming part of Salesforce will accelerate our vision to empower the world’s leading brands with the most innovative digital commerce solutions that enable them to connect 1:1 with customers across any channel.”

This is a huge deal for Salesforce, as it extends the types of transactions that it will be open to with existing customers, and also gives it a new group of customers to upsell for other services that it offers, from marketing and online analytics through to back-office software for sales and other IT functions. Demandware customers include Design Within Reach, Lands’ End, L’Oreal and Marks & Spencer, the company said.

It also opens up Salesforce to competition with the likes of Amazon, who not only provides third parties with commerce software, but would prefer to be the go-to platform for transactions. Gartner estimates that worldwide spending on digital commerce platforms is expected to grow at over 14 percent annually, reaching $8.544 billion by 2020, according to figures provided by salesforce.

Salesforce says its new Commerce Cloud “will be an integral part of Salesforce’s Customer Success Platform, creating opportunities for companies to connect with their customers in entirely new ways. Salesforce customers will have access to the industry’s leading enterprise cloud commerce platform, and Demandware’s customers will be able to leverage Salesforce’s leading sales, service, marketing, communities, analytics, IoT and platform solutions to deliver a more comprehensive, personalized consumer experience.”

more to come.

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