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UPDATE 4-Salesforce takes aim at e-commerce with $2.8 bln Demandware buy

Wed, 01st Jun 2016 21:25

* Salesforce offers $75/shr for Demandware

* Offer at premium of 56.3 pct

* High premium indicative of bidding war for Demandware -analyst

* Demandware shares jump to $74.92, Salesforce down slightly (Adds Breakingviews link, updates share prices)

By Anya George Tharakan and Kshitiz Goliya

June 1 (Reuters) - Cloud-based software maker Salesforce.comInc said on Wednesday it would buy Demandware Inc, whose software is used by businesses to run e-commercewebsites, for about $2.8 billion.

The deal would help Salesforce open a new front as it seeksto take more market share from traditional software providerssuch as Oracle Corp and SAP AG, both of whichalready offer cloud-based e-commerce services.

The e-commerce market has been growing at a blistering paceas retailers expand their online presence, boosting demand forsoftware that helps manage functions such as payment processingand inventory management.

Salesforce's cash offer of $75.00 per share represents a56.3 percent premium to Demandware's Tuesday closing.

The lofty premium indicates that multiple bidders werelikely at the table for Demandware, Stifel Nicolaus & Co analystThomas Roderick said, naming Adobe Systems Inc andOracle as the other possible contenders.

"We're not winning every deal, this is just the deal that wewere actually able to get done," Salesforce Chief Executive MarcBenioff told CNBC in an interview.

Demandware's shares, which have fallen about 21 percent inthe past year, rose 55.9 percent to $74.81 on Wednesday. Sharesof Salesforce, considered a barometer for the cloud-computingindustry, edged down 0.3 percent.

Demandware, whose customers include Lands' End Inc, L'Oreal SA and Marks and Spencer Group Plc,has reported sales growth of more than 30 percent for the last10 quarters.

"I think Salesforce has effectively already won the CRM war- they need to stay out front in terms of innovation and they doneed to have the broadest, deepest portfolio ... this was ablind spot for them," Wedbush Securities analyst Steve Koenigsaid.

Global spending on digital commerce platforms is expected togrow over 14 percent annually to about $8.5 billion by 2020,Salesforce said, citing research firm Gartner.

The deal, slated to close in Salesforce's second quarterending July, is expected to increase the company's 2017 revenueby about $100 million-$120 million.

Salesforce had forecast fiscal 2017 revenue of $8.16billion-$8.20 billion in May.

However, Salesforce said it now expected an adjusted profitof 93 cents-95 cents per share for the full year, down from itsprevious forecast of $1-$1.02.

BofA Merrill Lynch is Salesforce's financial adviser for thedeal, while Goldman Sachs is advising Demandware.

(Reporting by Anya George Tharakan and Kshitiz Goliya inBengaluru; Editing by Saumyadeb Chakrabarty and ShounakDasgupta)

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