Salesforce Buys Demandware for $2.8B in Big E-Commerce Bet

Cloud business software giant Salesforce plans to snap up Demandware for $2.8 billion in cash, marking one of the biggest acquisitions of a Massachusetts tech company in recent memory (this side of the pending $67 billion Dell-EMC deal).

In acquiring Burlington, MA-based Demandware (NYSE: DWRE), San Francisco-based Salesforce (NYSE: CRM) gains a big outpost in the Boston area. It will find a familiar neighbor: Oracle, a Salesforce rival also based in the San Francisco Bay Area, boosted its Bay State presence in a big way by purchasing Acme Packet for $2.1 billion in 2013, Endeca for about $1 billion in 2011, and Phase Forward for $685 million in 2010.

The Demandware deal is Salesforce’s largest acquisition to date, eclipsing the $2.5 billion it paid for Indianapolis-based ExactTarget in 2013.

The Demandware deal bolsters Salesforce’s set of cloud-based software offerings for businesses, which currently help run sales, marketing, customer service, data analytics, connected devices, apps, and more. Demandware sells cloud software that powers online shopping platforms for brands and retailers like Adidas, GoPro, Lands’ End, Panasonic, and Pier 1 Imports.

Demandware was founded in 2004 by Stephan Schambach, who now heads well-funded Boston mobile shopping startup NewStore. Currently led by CEO Tom Ebling, Demandware went public in 2012 during a busy year for Boston tech IPOs (remember those?).

Salesforce, which employs more than 20,000 people, notched nearly $6.7 billion in sales in its most recent fiscal year, but was $47.4 million in the red.

Demandware employed 943 people as of the end of December, but that number will be worth watching because there are usually job cuts after big acquisitions.

Demandware posted a net loss of about $37 million on $237.3 million in sales in its latest fiscal year. Salesforce said it expects the acquisition to tack $100 million to $120 million onto its revenue total this year.

The deal is expected to close by the end of July.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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