Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Valeant Pharmaceuticals Intl Inc (VRX),, inc. (CRM): Two Huge Deals as M&A Accelerates, inc. (NYSE:CRM)

Earlier this week, leading SaaS firm, inc. (NYSE:CRM) made headlines acquiring cloud marketing platform ExactTarget Inc (NYSE:ET) for $2.5 billion in cash ($33.75/share).

The move comes as, inc. (NYSE:CRM) hopes to round out its product offerings, and adding a company largely known for its email marketing platform helps the firm move towards this goal. CEO Marc Benioff, excited about this new acquisition, explained that the landscape is changing, saying on the deal’s conference call:

“There is no doubt our whole industry is changing, and the opportunity to create solutions in sales and service and marketing that are unified, that are mobile, that are social, that are in the cloud, that this combination of these two companies positions us in a way as never before.”

Prior to the deal,, inc. (NYSE:CRM)’s marketing platform was known to be relatively weak. While the firm features social media monitoring software Buddy Media, which also fetched several hundreds of millions of dollars, the company lacked an email service, which we believe is critical to any company’s marketing strategy. Unlike social media, where we believe the impact is still largely unquantifiable, e-mail marketing delivers strong data and analytical insights for businesses. In Benioff’s eyes, the deal rounds-out the product lineup and adds value to the firm’s existing offering.

Of course, with any acquisition, price is paramount. The firm paid a premium of about 47% over the prior day’s closing price, and 5.5x consensus FY 2014 sales. Additionally, ExactTarget Inc (NYSE:ET) hasn’t been profitable for several years, and its acquisition will weigh on results. Let’s not forget the company used virtually all of its cash to consummate the deal. Undoubtedly, the deal wasn’t cheap, and we aren’t sure if it will be able to live up to the bold assumptions embedded in the forecast.

Overall, we’re not huge fans of the deal, nor are we at all interested in, inc. (NYSE:CRM)’s stock at this time. With ExactTarget Inc (NYSE:ET) off the market, other automated email services like ConstantContact (CTCT) and Responsys (MKTG) could be acquisition targets for other cloud marketing competitors like IBM and SAP.

The article 2 Huge Deals as M&A Accelerates originally appeared on and is written by RJ Towner.

RJ Towner owns shares of Valeant. The Motley Fool recommends RJ is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.