IBJNews

Three other firms courted Indy's ExactTarget before Salesforce landed prize

Back to TopCommentsE-mailPrintBookmark and Share

For a bunch of computer nerds, ExactTarget Inc. certainly had a lot of suitors.

At least three other companies pursued the Indianapolis digital marketer amid its courtship with San Francisco-based Salesforce.com, which led to a $2.5 billion buyout announced June 4.

A U.S. Securities and Exchange Commission filing Wednesday details a bidding war in which Salesforce had to raise its offer repeatedly to keep pace with other would-be buyers. Records describe the suitors as “three other global software companies,” which are only identified as “Party A,” “Party B” and “Party C.”

Prior to the buyout announcement, analysts suspected Salesforce was leading a charge for ExactTarget. But corporations such as IBM, Adobe Systems and SAP also were on the list.

Discussions about a buyout go back as far as late 2012, when CEO Scott Dorsey and his leadership team began meeting periodically with the four companies.

Salesforce CEO Marc Benioff began meeting regularly with Dorsey and his officers on April 22, Wednesday's filing shows. Two days later, “Party A” told ExactTarget it had “a desire to move quickly” on a deal. Another two days later, on April 26, Benioff proposed a deal worth $26 apiece for ExactTarget’s 69.3 million shares.

It would have been a $1.8 billion deal that would have paid a 37-percent premium for shares that closed at $19.01 that day. Executives and advisers agreed that selling—to any of the four companies—was worth exploring, but a decision wouldn’t be made until weeks later.

Meetings and teleconferences continued with all the suitors into May. By May 9, ExactTarget’s leadership decide the company was worth more than $26 a share and agreed to suggest Salesforce boost its offer.

ExactTarget officials continued meeting with the other companies as they awaited word from Salesforce. On May 22, “Party B” offered $30 a share, which would translate to almost $2.1 billion—$300 million more than Salesforce’s first offer.

Dorsey followed up two days later with phone calls to Salesforce and “Party B.” Benioff responded later that day by matching the other company’s offer. After hearing that, ExactTarget and its financial advisers decided to see who would go higher.

“Party B” offered $30.50 a share but indicated it was willing to go as high as $32. It turned out to matter little because Benioff called a few hours later and offered to pay $33.75 per share. Salesforce sealed the deal with ExactTarget at that price June 3.

The deal represents a 53-percent premium to that day's closing price of $22.10 per share.

Technology sector observers expect the $2.5 billion deal to generate a ripple effect in startups and angel investing in Indianapolis. ExactTarget provided stock options to all employees, regardless of rank. The lofty sale price will generate option gains of nearly $300 million for the company's 1,700 workers.

The top three executives, meanwhile, are entitled to golden parachutes worth a total of $17 million, which is on top of the value of any shares they own outright, according to Wednesday’s SEC filing.

Dorsey accounts for more than half the parachute. He is entitled to receive almost $9.4 million under employment agreement terms governing a change in control. Most of Dorsey’s parachute, $8.5 million, comes through accelerated vesting of stock options and restricted stock.

Dorsey would forgo some of the parachute if he stays on after the sale, which he has said he will do. He is slated to join Benioff's senior management team and oversee ExactTarget as an independent unit.

Chief Financial Officer Steve Collins is entitled to a $3.7 million parachute, and Scott McCorkle, president of technology of strategy, is in line for $4 million, the filing shows.

ADVERTISEMENT

  • Didn't all those dot.com investors follow this reasoning
    I just don't buy....look at the future and ignore...(1)profitable completion, (2) no profits (3) limited fixed assets (4) technology that is easy to copy and steal. and (5) really good competition. In the bidding war, if you believe it, each of the loosers can start or continue to run their business...with the experience and record of making money. I recall the great investments in the dot.com companies....on-line pet food. Not many made money outside the people who started it. Investors lost everything. To me ExactTarget -- leading edge claiming....is about the same.
  • Congratulations
    Lost in the story is the amazing leadership of Scott Dorsey. I think the list of CEO's that have taken a company from its inception to a $2.5 billion sale is a very, very small one. Scott always fit the position - from when ExactTarget was only a few employees right up until present day. Well done. I'm still surprised Microsoft wasn't looking at ExactTarget given the amazing implementation of Microsoft technologies there.
  • What Bill Gates Learned from Buffett
    Look for a company’s moat—its competitive advantage—and whether the moat is shrinking or growing. A shareholder has to act as if he owns the entire business, looking at the future profit stream and deciding what it’s worth. You have to be willing to ignore the market rather than follow it, because you want to take advantage of the market’s mistakes.
  • A company without income sold to a company without money
    I have troubles with this sale. Salesforce does not have lots of cash for the purchase that I see. Salesforce does not have sales to support a 2.5 Billion dollar purchase. ExactTarget, loosing 7 cents for every dollar of sales. Salesforce, lost money for last year. It just does not add up. Add to this....really tough competition that currently makes money. (Only my pension fund manager would be dumb enough to invest in these companies.)
  • Adobe...
    Man, Adobe should have pulled the trigger on this. They really missed the boat. Adobe wants to be a SaaS and Adobe buying ExactTarget would have got them in that space WITHOUT making users rent Photoshop, read more here - http://goo.gl/CgBiL Just hope that ExactTarget stays in Indy. In hindsight, ExactTarget's M&A (iGoDigital, Pardot, etc...) were all about this 2.5 Billion M&A, lol.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Why not take some time to do some research before traveling to that Indiana town or city, and find the ones that are no smoking either inside, or have a patio? People like yourself are just being selfish, and unnecessarily trying to take away all indoor venues that smokers can enjoy themselves at. Last time I checked, it is still a free country, and businesses do respond to market pressure and will ban smoking, if there's enough demand by customers for it(i.e. Linebacker Lounge in South Bend, and Rack and Helen's in New Haven, IN, outside of Fort Wayne). Indiana law already unnecessarily forced restaurants with a bar area to be no smoking, so why not support those restaurants that were forced to ban smoking against their will? Also, I'm always surprised at the number of bars that chose to ban smoking on their own, in non-ban parts of Indiana I'll sometimes travel into. Whiting, IN(just southeast of Chicago) has at least a few bars that went no smoking on their own accord, and despite no selfish government ban forcing those bars to make that move against their will! I'd much rather have a balance of both smoking and non-smoking bars, rather than a complete bar smoking ban that'll only force more bars to close their doors. And besides IMO, there are much worser things to worry about, than cigarette smoke inside a bar. If you feel a bar is too smoky, then simply walk out and take your business to a different bar!

  2. As other states are realizing the harm in jailing offenders of marijuana...Indiana steps backwards into the script of Reefer Madness. Well...you guys voted for your Gov...up to you to vote him out. Signed, Citizen of Florida...the next state to have medical marijuana.

  3. It's empowering for this niche community to know that they have an advocate on their side in case things go awry. http://www.youtube.com/watch?v=Lrst9VXVKfE

  4. Apparently the settlement over Angie's List "bundling" charges hasn't stopped the practice! My membership is up for renewal, and I'm on my third email trying to get a "basic" membership rather than the "bundled" version they're trying to charge me for. Frustrating!!

  5. Well....as a vendor to both of these builders I guess I have the right to comment. Davis closed his doors with integrity.He paid me every penny he owed me. Estridge,STILL owes me thousands and thousands of dollars. The last few years of my life have been spent working 2 jobs, paying off the suppliers I used to work on Estridge jobs and just struggling to survive. Shame on you Paul...and shame on you IBJ! Maybe you should have contacted the hundreds of vendors that Paul stiffed. I'm sure your "rises from the ashes" spin on reporting would have contained true stories of real people who have struggled to find work and pay of their debts (something that Paul didn't even attempt to do).

ADVERTISEMENT