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Salesforce agrees to buy MuleSoft for about $6.5B

(Bloomberg) -- Salesforce Inc. said it agreed to buy MuleSoft Inc. for about $6.5 billion, giving the market leader in customer-relationship software access to new products and corporate users.

San Francisco-based Salesforce is paying $36 in cash and 0.0711 shares of its common stock for each MuleSoft share, according to a statement. That’s 36 percent more than MuleSoft’s closing share price on Monday. Salesforce said the $6.5 billion total price represents MuleSoft’s enterprise value.

MuleSoft helps companies like McDonald’s Corp. and Coca-Cola Co. build applications by connecting data from their in-house servers and public cloud providers and adding online services from partners. Salesforce has tried to grow and compete with larger rivals including Oracle Corp. by expanding its corporate software offerings to capture more customers and sell them complementary products.

“This acquisition will expand Salesforce.com’s Platform-as-a-Service (PaaS) portfolio of products,” said Anurag Rana, an analyst at Bloomberg Intelligence. “PaaS is increasingly becoming an important way for cloud application software companies to differentiate themselves."

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Pedestrians walk past signage for the DreamForce Conference in San Francisco, California, U.S., on Monday, Nov. 6, 2017. Salesforce Chief Executive Officer Marc Benioff -- whose central products help businesses manage customer relationships -- wants to find new ways to encourage greater use of the platforms that enable clients to build software and customize features. Photographer: Michael Short/Bloomberg

Salesforce shares dipped 2.5 percent in extended trading, after closing at $125.12 in New York on Tuesday. The company said it will pay for the cash part of the acquisition with existing funds and by borrowing $3 billion.

Adding MuleSoft may help mitigate a recent slowdown in Salesforce’s growth. The target company reported revenue growth of 58 percent last year and is on course to expand at about 40 percent in 2018, according to data compiled by Bloomberg.

Revenue from Salesforce’s existing business that helps companies build custom applications gained 37 percent -- the biggest jump of any unit -- to $536.3 million in the most-recent quarter.

--With assistance from Ian King