US activist investment firm Elliott Investment Management has acquired a billion-dollar stake in Salesforce, the business software company that owns the Slack messaging platform.
Elliott, which typically buys shares in underperforming companies and seeks changes in the way they are run, said it looks forward to working “constructively” with the San Francisco-based company without revealing any strategic proposals.
“We look forward to working constructively with Salesforce to realize the value befitting a company of its size,” Jesse Cohn, a managing partner at Elliott, told Reuters.
Cohn, who has served on the boards of several technology companies, including Twitter and eBay, called Salesforce “one of the most distinguished software companies in the world,” adding that he has “developed a deep respect for [Salesforce’s co-chief executive] Marc Benioff and what he built”.
However, Elliott, led by founder and co-director, Paul Singer, is known for employing the aggressive tactics associated with activist firms. In 2021, British drugmaker GlaxoSmithKline, now known as GSK, resisted attempts by Elliott to have its CEO, Emma Walmsley, reapplied before the company underwent restructuring. In the same year, Elliott accused British energy company SSE of having a “lackluster” business plan.
In 2012, a dispute with Argentina over Elliott’s national debt led to the temporary seizure of an Argentine naval vessel in Ghana. Elliott also buys businesses and owns the UK bookstore chain Waterstones.
Salesforce has been contacted for comment. Benioff co-founded the company and will be sole boss when fellow CEO Bret Taylor leaves at the end of this month.
Benioff announced this month that Salesforce would make 8,000 positions obsolete, impacting about 10% of the workforce. In a message to staff, he blamed himself for expanding the company too quickly during the coronavirus pandemic amid rising demand for tech products and services as millions of people around the world worked from home. Salesforce has employed nearly 80,000 people as of last October, compared to 49,000 at the beginning of 2020.
“As our revenue accelerated through the pandemic, we overhired, leading to this economic downturn we are now facing, and I take responsibility for that,” Benioff wrote.
The big US tech companies have made a series of layoff announcements in recent months, with Alphabet, the owner of Google, the latest to announce job-cutting plans, saying Friday that it would cut its global workforce by 12,000.
Elliott has made a lot of technology-focused investments. It recently won a board seat at Pinterest, the online bulletin board company, when the company added Elliott portfolio manager Marc Steinberg as a director.
Salesforce is valued at $151 billion (£122 billion), but its share price is down 32% over the past year. The size of the stake Elliott has taken has not been disclosed, although the Wall Street Journal, which first reported the move, described it as a “billion dollar investment”.
Elliott’s investment is the second time in three months that an activist company has taken a stake in Salesforce. In October, Starboard Value announced an undisclosed stake and said Salesforce suffered from a valuation discount due to a “sub-par mix of growth and profitability.”
Starboard CEO Jeffrey Smith said at the time that his company was in talks with management and that new executives, including Taylor who was promoted to the Salesforce role in November 2021, were better focused on balancing growth ambitions and achieving goals. gain.
Elliott has been approached for comment.