Investing.com -- Salesforce (NYSE: NYSE:CRM) announced on Thursday that it will acquire Own Company, a provider of data protection and management solutions, for $1.9 billion in cash. Through the deal, Salesforce aims to improve the growth of Salesforce's data security and privacy products.
The move comes as customers increasingly focus on minimizing data loss risks stemming from system failures, human error, and cyberattacks.
Salesforce expects the deal to contribute to free cash flow starting in the second year after the acquisition closes.
“We believe this is a logical acquisition that should enhance CRM's data/AI strategy, and free cash flow (FCF) accretion is expected in the second year after the deal closure,” Mizuho analysts said in a note. “While CRM has not commented on the operating margin impact, we do not expect this deal to halt CRM's commitment to OM progression.”
Overall, the deal shows that Salesforce is exercising “a higher level of discipline” when it comes to mergers and acquisitions (M&A).
Separately, Wolfe Research analysts said the Thursday news of Salesforce acquiring Own Company was “about as positive as an M&A headline for CRM could be.”
Wolfe views the deal as a strategic move that positions Salesforce to enter the adjacent data protection total addressable market (TAM), which is currently valued at around $150 billion. They estimate that the cloud data segment could represent at least $30 billion of that total.
Also, the investment bank believes the acquisition reduces the likelihood of Salesforce pursuing a large, dilutive deal. Since Own Company is built on the Force.com platform, scaling the business should be more seamless, given Salesforce’s deep familiarity with the technology.
“Own is highly regarded as one of the best platforms for Salesforce data backup, and with already strong AppExchange traction, we believe CRM's GTM engine can help quickly scale Own across the existing customer base and further unlock the large cloud data protection and management TAM,” Wolfe analysts noted.
“We really like this deal for Salesforce,” they added.
The acquisition is expected to close in the fourth quarter of fiscal 2025.