On the other side, a number of shareholder-rights advocates have opened preliminary investigations into the pre-deal shopping period as well as the valuation methods that ExactTarget’s management team employed. These investigations center around relatively high analyst target prices that conflict with Salesforce’s offer price. Nevertheless, ExactTarget Inc (NYSE:ET)’s price action suggests that investors do not expect these challenges to halt the deal’s momentum.
Synergies and Strengths
Over the past few years, Salesforce has targeted a number of digital marketing firms for acquisition. This drive has augmented its core sales-platform operation and made it an attractive online marketing partner for large businesses that lack the capacity to develop such tools in-house. ExactTarget will sharpen its digital marketing sword even further and create a formidable player in the space. Although limited redundancies may tamp down the actual cost savings that result from this deal, the merger is likely to provide Salesforce with a competitive advantage that could lead to a huge revenue boost.
Is it Worthwhile?
Although arbitrage investors do not have much to gain from this merger, tech-savvy traders may have a play here. At this point, the nascent legal challenges appear unlikely to scuttle the deal. Moreover, its theoretical benefits are obvious. Although there is enough doubt about the deal to make it something less than a slam dunk, there seems to be a great deal of support for it as well. As always, investors should conduct their own research to determine whether a long position in ExactTarget Inc (NYSE:ET) or salesforce.com, inc. (NYSE:CRM) may be warranted.
The article Acquisition Raises Eyebrows But May Offer Profit Potential for You originally appeared on Fool.com and is written by Mike Thiessen.
Mike Thiessen has no position in any stocks mentioned. The Motley Fool recommends Salesforce.com. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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