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Activist investor Elliott takes stake in Slack owner Salesforce

Activist investor Elliott takes stake in Slack owner Salesforce

US investment group typically buys stakes in underperforming firms and seeks changes to way they are run

The US activist investor firm Elliott Investment Management has taken a multibillion-dollar stake in Salesforce, the business software company that owns the Slack messaging platform.

Elliott, which typically buys stakes in underperforming companies and seeks changes to the way they are run, said it was looking forward to working “constructively” with the San Francisco-based company, without revealing any strategic proposals.

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

Cohn, who has served on the boards of several technology companies including Twitter and eBay, called Salesforce “one of the pre-eminent software companies in the world”, adding that he has “developed a deep respect for [Salesforce’s co-chief executive] Marc Benioff and what he has built”.

However, Elliott, under the leadership of founder and co-chief executive, Paul Singer, is known for wielding the aggressive tactics associated with activist firms. In 2021 the British drugmaker GlaxoSmithKline, now known as GSK, resisted attempts by Elliott to make its chief executive, Emma Walmsley, reapply for her job before the company underwent a restructuring. In the same year Elliott accused the UK energy firm SSE of having a “lacklustre” business plan.

In 2012, a dispute with Argentina over sovereign debt owned by Elliott led to the temporary impounding of an Argentinian naval ship in Ghana. Elliott also buys businesses and is the owner of the UK bookshop chain Waterstones.

Salesforce has been contacted for comment. Benioff co-founded the company and will be the sole boss when his fellow chief executive, Bret Taylor, leaves at the end of this month.

Benioff announced this month that Salesforce would be making 8,000 roles redundant, affecting about 10% of its workforce. In a message to staff, he blamed himself for expanding the company too rapidly during the coronavirus pandemic, amid surging demand for tech products and services as millions of people worked from home around the world. Salesforce employs nearly 80,000 people as of last October, compared with 49,000 at the beginning of 2020.

“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” Benioff wrote.

The big US tech firms have made a series of redundancy announcements in recent months with Alphabet, the owner of Google, the latest to reveal job cutting plans, saying on Friday that it would reduce its worldwide workforce by 12,000 people.

Elliott has made many technology-focused investments. It recently won a board seat at Pinterest, the online pinboard business, when the company added the Elliott portfolio manager Marc 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 taken by Elliott has not been disclosed although the Wall Street Journal, which first reported the move, described it as “multibillion dollar” investment.

Elliott’s investment marks the second time in three months that an activist firm has taken a stake in Salesforce. In October, Starboard Value announced an undisclosed stake and said Salesforce was suffering from a valuation discount due to a “subpar mix of growth and profitability”.

Starboard’s chief executive, Jeffrey Smith, said at the time that his firm had been engaging with management and that new executives, including Taylor who was promoted to the Salesforce role in November 2021, were better focused on balancing growth aspirations and profit delivery.

Elliott has been approached for comment.

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