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Behind Salesforce’s Exit from the Twitter Buyout

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Nov. 20 2020, Updated 5:06 p.m. ET

Salesforce’s decision to walk away from Twitter buyout

Salesforce (CRM) garnered negative attention in September 2016 when it reported that the company was considering an acquisition of Twitter (TWTR). Apart from Salesforce, Google (GOOG) (GOOGL), Microsoft (MSFT), and Walt Disney (DIS) also showed an interest in the acquisition of Twitter.

Salesforce’s interest in Twitter was driven by the former’s interest in the social media space, but after meeting opposition from its own shareholders and considering Twitter’s stagnating sales and subscriber growth, Salesforce backed away from the deal. Salesforce’s stock, which fell ~7% on account of the company’s interest in Twitter, almost recovered after the company announced its decision to back out from Twitter’s buyout.

Prior to its interest in Twitter, Salesforce had considered a LinkedIn (LNKD) acquisition. However, Microsoft won the bidding war, though Salesforce’s bid for LinkedIn prompted Microsoft (MSFT) to raise its own bid.

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Salesforce’s dominance in CRM and SaaS space, interest in AI

Although Microsoft recently claimed Salesforce’s leadership position in the SaaS (software-as-a-service) space, Salesforce continues to be a leader in the CRM (customer relationship management) space. CRM is the largest component of SaaS and is the fastest-growing sector in the cloud computing space. Salesforce’s dominance in CRM will further be strengthened by its opportune interest and strategic acquisitions in AI (artificial intelligence).

Later in this series, we’ll discuss how Salesforce dominance in CRM and SaaS fueled Morgan Stanley’s (MS) bullishness on the company’s stock.

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