Salesforce's (NYSE: CRM) agreement to buy the software integration company Mulesoft (NYSE: MULE) for $6.5 billion is the largest purchase to date for California-based cloud computing organization. The deal includes a $44.99 per share payout for Mulesoft at a 36 percent premium, allowing Mulesoft to be .0711 shares of Salesforce stock as a whole. Salesforce hopes to use the acquisition to build a stronger connection between users' cloud and premise data, as well as offer its customers an opportunity to compose microservices.
Microservices have a particular value in the cloud enterprise. "We're moving toward a world where microservices are very important," says Paul Greenberg, President of The 56 Group LLC. "In order to do that right, companies need to have integration via APIs and management of APIs. And that's something MuleSoft offers at enterprise grade and fits well into the Salesforce platform." The possibility of microservice architecture, a method of software development that launches a suite of modular services with independent processes, will allow Salesforce to support a plethora of devices, including mobile, computers and wearable technology. Likewise, under this framework, individual services can be modified and assigned new tasks without modifying a software application as a whole. Given that Mulesoft already offers Fortune 500 companies the option to further connect their services, Salesforce could use this opportunity to further diversify its customer base. With the deal, Salesforce will be reaching an additional 1,200 customers. But will this be enough to catapult Salesforce into a cloud computing giant?
The cloud computing enterprise is growing continually, but with large competitors such as Microsoft (NASDAQ: MSFT), Oracle (NYSE: ORCL) and Amazon (NASDAQ: AMZN), Salesforce will need to offer a different, stronger option of cloud computing to its customers. As of now, Salesforce is going down the same route as the computer technology company Oracle, which over the years has purchased smaller companies with value that Oracle could not create on their own platform. Oracle, along with other companies, has already bought companies that allow them to further offer API architecture, making their software more flexible for a world that is increasingly relying on cloud capabilities. Salesforce's choice to offer integration services for customers points towards a growing shift towards API structure in the world of cloud computing.
Mulesoft shares rose more than 27 percent during the trading season, and 4.3 percent after hours following the announcement of its new deal with Salesforce. From its successful opening as a IPO a year ago with a 45% increase from its trading debut, to its revenue of $296.5 million, Mulesoft appears to be an expensive yet lucrative advantage for Salesforce. However, only time will tell if Salesforce will be able to provide services that differentiate it from bigger cloud computing giants.