Activist Takes Big Stake in Salesforce


Activist investor Elliott Management Corp. has made a multibillion-dollar investment in

Salesforce Inc.,


CRM 3.31%

according to people familiar with the matter, adding to the pressures facing the business-software provider.

While details of the campaign couldn’t be learned, Elliott, one of the biggest and most prolific activists, often seeks board representation and pushes for companies to make operational improvements and other changes.

“Salesforce is one of the preeminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for [Co-Chief Executive]

Marc Benioff

and what he has built,”

Jesse Cohn,

managing partner at Elliott, said.

“We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” added Mr. Cohn, who has previously served on the boards of companies including Citrix, eBay Inc. and Twitter.

It has been a turbulent stretch for Salesforce. Earlier this month, the company said it was laying off 10% of its workforce and reducing its office space in certain markets.

Mr. Benioff said many customers are taking a more cautious approach to spending, something more software companies are facing amid fears of an economic slowdown. Mr. Benioff, who also serves as chairman, said Salesforce hired too many people as revenue surged earlier in the Covid-19 pandemic, echoing other tech executives as industrywide layoffs intensify.

Marc Benioff is co-chief executive officer of Salesforce.



Photo:

Stefan Wermuth/Bloomberg News

Salesforce had nearly 80,000 employees globally as of Oct. 31, up from more than 49,000 as of Jan. 31, 2020, according to company filings.

Salesforce reported revenue for its fiscal third quarter ended Oct. 31 of $7.84 billion, up 14% from the prior year. That marked a sharp slowdown from 27% revenue growth in the same quarter a year earlier. The company also declined to issue guidance for its fiscal year 2024.

Salesforce’s stock, a stellar performer for years, has taken a beating, down by about half from a late-2021 high and giving the company a market capitalization of roughly $150 billion. The shares closed Friday at $151.25, up 3.3% on a big day for technology stocks.

There has been upheaval, meanwhile, in Salesforce’s top ranks. Co-CEO

Bret Taylor

is expected to vacate his position on Jan. 31, ending the company’s second experiment in recent years with dual leadership. Mr. Taylor had shared the top role with Mr. Benioff for about a year. (Mr. Benioff is to become sole leader again and continue to serve as the company’s chairman.) Mr. Benioff, who co-founded the business in 1999, became frustrated about how Mr. Taylor was spending his time, The Wall Street Journal previously reported.

Stewart Butterfield,

the chief executive and co-founder of Slack Technologies, the workplace-messaging app Salesforce acquired during the pandemic, announced his departure last month.

The company had been an active acquirer in recent years. Last year, Salesforce completed the deal for Slack, for more than $27 billion. Two years prior, it spent around $15 billion for data-analytics platform Tableau Software Inc. A year before that, the company shelled out more cash and stock in a $6 billion-plus deal for MuleSoft.

This isn’t the first time lately that Salesforce has drawn activist interest. In October, Starboard Value LP revealed it had taken a stake in Salesforce, arguing that the company’s mix of growth and profitability is far below that of its peers. Starboard founder Jeff Smith’s ambition for change at the company has appeared more modest, with the firm so far stopping short of calling for specific measures.

Elliott is known for taking on tech companies and others and forcing changes that also include sales and executive shake-ups.

Its targets have included

PayPal Holdings Inc.,

AT&T Inc.,

Dell Technologies Inc.

and Twitter. Late last year, it struck an agreement with

Pinterest Inc.

to add Marc Steinberg, a senior Elliott portfolio manager, to the social-media company’s board.

With more than $55 billion in assets under management as of June, Elliott also has a private-equity arm that sometimes bids on companies that are targets of its activist campaigns.

Write to Lauren Thomas at lauren.thomas@wsj.com and Laura Cooper at laura.cooper@wsj.com

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