February 6, 2023

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Activist investor Elliott acquires a stake in Salesforce, owner of the Slack technology sector

American activist investor Elliott Investment Management has taken a multi-billion dollar stake in Salesforce, the business software company that owns the Slack messaging platform.

Elliott, which typically buys stakes in underperforming companies and is seeking to change the way they are managed, said it was looking forward to working “constructively” with the San Francisco-based company, without disclosing any strategic proposals.

“We look forward to working constructively with Salesforce to realize the value befitting of its position,” Jesse Cohn, managing partner at Elliott, told Reuters.

Cohn, who has served on the boards of several tech companies including Twitter and eBay, called Salesforce “one of the preeminent 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, under the leadership of co-founder and CEO Paul Singer, is Known for practicing aggressive tactics associated with corporate activists. In 2021, British pharmaceutical company GlaxoSmithKline, now known as GSK, resisted Elliott’s attempts. to get her CEO, Emma Walmsley, to apply for her job before the company undergoes restructuring. In the same year, Elliott accused the British energy company SSE Having a “lackluster” business plan.

In 2012, a dispute with Argentina over Elliott’s sovereign debt led to an issuance Temporary reservation of an Argentine naval ship in Ghana. Elliot also buys companies and is the owner of the Waterstones UK bookstore chain.

Salesforce has been contacted for comment. Benioff co-founded the company and will be sole chairman when fellow CEO, Brett Taylor, departs at the end of this month.

Benioff announced this month that Salesforce will cut 8,000 jobs, affecting about 10% of its workforce. In a letter to employees, he blamed himself for expanding the company too quickly during the coronavirus pandemic, amid soaring demand for tech products and services as millions of people work from home around the world. Salesforce employs nearly 80,000 people as of last October, compared to 49,000 at the start of 2020.

“With our revenue accelerating during the pandemic, we hired way too many people which led to this economic downturn we’re in right now, and I take responsibility for that,” Benioff wrote.

Major US tech companies have made a series of iterations in recent months with Alphabet, owner of Google, most recently revealing plans to cut jobs, saying on Friday that it It will reduce its worldwide workforce by 12,000 people.

Elliott has made several technology-focused investments. It recently won a board seat at Pinterest, the online board company, when the company added Elliott portfolio manager Mark Steinberg as a director.

Salesforce is valued at $151bn (£122bn) but its share price has fallen 32% over the past year. The size of the stake Elliott acquired was not disclosed although The Wall Street Journal, who reported the first moveShe described it as a “billion-dollar” investment.

Elliott’s investment marks the second time in three months that an activist company has acquired a stake in Salesforce. In October, Starboard Value announced an undisclosed stake and said Salesforce was suffering at 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 handling management and that the new executives, including Taylor who was promoted to a Salesforce role in November 2021, were better focused on balancing growth aspirations with profitability.

Elliott has been contacted for comment.

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