Activist US investor firm Elliott Investment Management has taken a multibillion-dollar stake in Salesforce, the enterprise software company that owns the messaging platform Slack.
Elliott, which typically buys shares in underperforming companies and seeks changes to the way they are run, said it looks forward to working “constructively” with the San Francisco-based company without making strategic suggestions.
“We look forward to working constructively with Salesforce to realize the value befitting a company of its size,” Jesse Cohn, Elliott’s managing partner, told Portal.
Cohn, who has served on the boards of several technology 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 it [Salesforce’s co-chief executive] Marc Benioff and what he built”.
However, under the direction of founder and co-CEO Paul Singer, Elliott is known for employing the aggressive tactics associated with activist firms. In 2021, British drugmaker GlaxoSmithKline, now known as GSK, resisted attempts by Elliott to get its chief executive, Emma Walmsley, to reapply for her job before the company restructured. That same year, Elliott accused British energy company SSE of having a “lacklustre” business plan.
In 2012, a dispute with Argentina over sovereign debt owned by Elliott led to the temporary confiscation of an Argentine Navy ship in Ghana. Elliott also buys companies and owns the UK bookstore chain Waterstones.
Salesforce was contacted for comment. Benioff was a co-founder of the company and will be the sole boss when fellow board member Bret Taylor leaves later this month.
Benioff announced this month that Salesforce would lay off 8,000 roles, affecting about 10% of its workforce. In a message to employees, he accused himself of expanding the company too quickly during the coronavirus pandemic amid rising demand for tech products and services as millions of people around the world worked from home. Salesforce employed nearly 80,000 people last October, compared to 49,000 in early 2020.
“As our revenue accelerated from the pandemic, we hired too many people, resulting in this economic downturn that we are now facing, and I take responsibility for that,” Benioff wrote.
Big US tech companies have announced a spate of layoffs in recent months, with Alphabet, the owner of Google, most recently announcing plans to cut jobs, saying on Friday it would reduce its global workforce by 12,000 employees.
Elliott has made many technology-focused investments. It recently won a board seat at Pinterest, the online pinboard company, when the company added Elliott portfolio manager Marc Steinberg as a director.
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Salesforce is valued at $151 billion (£122 billion) but its share price has fallen 32% over the past year. The size of Elliott’s stake was not disclosed, although The Wall Street Journal, which first reported the move, described it as a “multi-billion dollar” investment.
Elliott’s investment marks the second time in three months that an activist firm has invested in Salesforce. In October, Starboard Value announced an undisclosed holding, saying that Salesforce is suffering from a valuation discount due to an “underperforming mix of growth and profitability.”
Starboard CEO Jeffrey Smith said at the time that his company had been working with management and that new executives, including Taylor, who was promoted to the Salesforce role in November 2021, were better focused on balancing growth goals and profit generation bring.
Elliott was contacted for comment.