Cross Microsoft off the list of potential Salesforce suitors -- and maybe everyone

Microsoft considers Salesforce's almost $US50 billion market valuation too high, report says

Rumors of a potential Salesforce acquisition have been flying for over a week now, including the recent suggestion that Microsoft was a likely contender. According to a new report, however, it now looks like that's not the case.

Microsoft considers Salesforce's almost $US50 billion market valuation too high and has no plans to make a bid for the cloud-software company in the near term, Reuters reported late on Thursday, citing unnamed sources. It may, however, reconsider the possibility in the future, the sources reportedly said.

Earlier this week, SAP - also widely considered a contender - said it had "zero interest" in making such an acquisition.

A Bloomberg report last Wednesday was what originally set off the wave of speculation about the possibility of a Salesforce acquisition, which could be the largest ever in the software industry. Sparking that report was news that Salesforce had been approached by a potential acquirer and hired a team of financial advisers to help it field such offers.

Both Microsoft and Salesforce declined to comment.

"Nobody is buying Salesforce," said Denis Pombriant, managing principal at Beagle Research Group.

Rather, the company has engaged bankers to help it figure out a strategy to buy a small part of UK-based enterprise-software maker Sage Group, Pombriant believes. Based on an invitation he received for a "fireside chat" next Wednesday, in fact, he expects the two companies' CEOs -- Marc Benioff of Salesforce and Stephen Kelly of Sage -- to explain the details soon, he said.

Sage Group could not immediately be reached for comment.

As an acquisition target itself, Salesforce is attractive but too expensive to buy, Pombriant said. "Salesforce is pricey, its nearest rivals have invested scads of money in building their own cloud capabilities, and the time to acquire the company is long passed."

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Tags cloud computingMicrosoftMergers and acquisitionsinternetbusiness issuesSalesforce.comsoftwareapplicationsCustomer Relationship Management

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Katherine Noyes

IDG News Service
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