Salesforce, activist investor Elliott may soon reach deal

Cloud-based software firm Salesforce Inc (CRM.N) and activist investor Elliott Management Corp are in discussions to reach an agreement that may end a possible board challenge, according to two people familiar with the matter.

The battle at Salesforce has pitted Elliott as well as other activist investors against Marc Benioff, one of Silicon Valley’s most iconic chief executives. Salesforce’s growth has slowed dramatically in recent quarters and last month the company said it would cut 10% of jobs to address its performance.

Activists, which also include Jeff Ubben’s Inclusive Capital Partners and Jeff Smith’s Starboard Value, have been pushing for Salesforce to increase growth and margins, buy back more shares, and raised concerns about recent acquisitions.

Elliott, which unveiled its stake in January and has been engaging with the company for about a month, had searched for director candidates laying the groundwork for a potential challenge.

A settlement could potentially bring the two sides together, the sources said. But there is no indication on when an agreement might be reached or what it might look like.

Shares of the stock were down 2.4% in trading on Friday; Salesforce has lost more than 20% of its value in the last 52 weeks, trailing the S&P 500.

Earlier this year, Salesforce, which is valued at $168 billion, said it planned to cut a tenth of jobs and close some offices after rapid pandemic hiring left it with a bloated workforce.

The company also refreshed its board, adding the principal of hedge fund ValueAct.

ValueAct Capital’s Mason Morfit will be joined by Mastercard finance chief Sachin Mehra and former chief executive of Carnival Corp Arnold Donald on the board.

ValueAct has experience with companies like Salesforce after Morfit served on the board of Microsoft, where the board set cloud targets for management and tied them to a compensation plan. ValueAct also had a board seat at Adobe.

Elliott too has long invested in technology companies and in the past reached settlements for board seats with companies including Pinterest, Twitter and eBay. Reuters