Why Salesforce Is Acquiring Quip



Quip is Salesforce’s latest acquisition

The technology space witnessed some of the largest mergers and acquisitions ever in 2016. Earlier in the series, we learned that Rackspace (RAX) is considering its sale. Some of the largest acquisitions in the technology space so far include the Oracle (ORCL)-NetSuite deal, the Microsoft (MSFT)-LinkedIn (LNKD) deal, the Salesforce (CRM)-Demandware deal, the Verizon (VZ)-Yahoo deal, and the Symantec (SYMC) BlueCoat Systems deal.

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Salesforce, which wants to expand its horizon in the cloud space, is also aggressively pursuing its acquisition strategy. It announced the acquisition of Quip on August 2, 2016. The SEC filing regarding Quip’s acquisition shows that Salesforce, apart from acquiring Quip with $582 million worth of shares, will take on “other equity awards” as a part of this deal. According to TechCrunch, Salesforce’s offer to buy Quip including the cash component comes out to be $750 million.

Salesforce aims for productivity and collaboration space with Quip

Quip was founded in 2012 by Bret Taylor and Kevin Gibbs. Bret Taylor is the former CTO (chief technology officer) of Facebook (FB), and Kevin Gibbs has previously been associated with Google (GOOG).

Quip is a cloud-based word processing application that allows users to create, write, edit, and share their documents on a plethora of devices from desktops to smartphones. To date, it has raised $45 million in funding.

As the above presentation shows, Quip supports Apple (AAPL) devices, Microsoft (MSFT) devices, and Google Android devices. Quip claims that Quip Desktop is approximately 2.6 times faster than Microsoft Word.

Thus, Quip’s acquisition will boost the Salesforce position in the rapidly growing productivity and collaboration space. Sharing her opinion on Salesforce’s recent acquisition, Susan Kimberlin, an investor in the technology space and former director of product management at Salesforce, stated, “Quip makes sense as an addition to the Salesforce product suite, filling in the office productivity tools niche, which Salesforce did not already have covered in a meaningful way.”

Investors who wish to gain broad-based exposure to the software space can consider investing in the PowerShares US Technology ETF (QQQ). QQQ has an exposure of 24.5% to application software.


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