Elliott takes multibillion-dollar activist stake in Salesforce

Elliott Management has built a multibillion-dollar position in Salesforce, as another big activist investor joins the shareholder roster of a software group facing calls to cut costs and improve its stock price.

The New York-based firm joins fellow activist investor Starboard Value, which disclosed a stake in Salesforce in October with a call to increase profit margins. It was unclear what Elliott’s position on the company is and whether it has made recommendations to the board.

The activist stakes will raise pressure on Salesforce and its co-chief executive and co-founder Marc Benioff. The company has shed about $170 billion (€156 billion) in market value from its peak in late 2021 amid retrenchment in the technology sector following a pandemic-driven boom.

“Salesforce is one of the pre-eminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built,” Jesse Cohn, managing partner at Elliott, said in a statement. “We look forward to working constructively with Salesforce to realise the value befitting a company of its stature.”

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Salesforce declined to comment. Elliott’s stake was first reported by the Wall Street Journal.

Earlier this month, Salesforce announced it would cut about 10 per cent of its workforce in a reversal of a pandemic hiring spree. The company added nearly 17,000 employees in 2021. The group is one of a number of Big Tech companies, including Alphabet, Amazon, Microsoft and Meta, to have announced sweeping job cuts in the past few weeks amid a slowdown in growth across the industry.

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“We hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” Mr Benioff wrote in a letter to staff at the time. The company said it expected to incur $1.4 billion to $2.1 billion in charges associated with the layoffs and restructuring.

The San Francisco-based enterprise software group has also had several high-profile departures from its management ranks. Co-chief executive Bret Taylor announced in November that he would be stepping down this month. Stewart Butterfield, the chief executive of workplace tool Slack, which Salesforce acquired in July 2021, also confirmed last month that he would be departing.

Elliott is one of the best-known activist investors on Wall Street with a reputation for tackling technology companies. Under Mr Cohn’s oversight, the firm has become one of the largest and most active software investors in the world.

Last year, Elliott helped to assemble takeovers of enterprise software specialist Citrix Systems and media ratings group Nielsen, two of the largest leveraged buyouts (LBOs) of the year, through its private equity unit Evergreen Coast Capital.

Elliott has the flexibility to build large activist public shareholdings as well as to help arrange and participate in large private equity deals. Along with buyout firm Francisco Partners, it acquired non-core assets from Dell Technologies in 2016. Elliott has also worked with a number of large private equity firms to assemble LBOs outright. – Copyright The Financial Times Limited 2023