Why Informatica Stock Got Mashed on Monday

A huge name in the customer-relationship management space is apparently interested in owning the company.

Trading was sprightly in enterprise cloud-data management specialist Informatica‘s (INFA -6.50%) stock on Monday. That wasn’t necessarily a good development, as the company is apparently the target of a buyout offer that will see its shares change hands at something of a discount. Informatica’s shares closed the day down by nearly 7%, a notably steeper decline than the S&P 500 index’s 1.2% fall.

Sources say it’s a buyout target

The previous Friday evening, The Wall Street Journal reported that Informatica is in talks to be acquired by customer-relationship management (CRM) giant Salesforce (CRM -7.28%). Citing unidentified “people familiar with the matter,” the newspaper wrote that the per-share price being discussed is under Informatica’s $38.48 closing price on Friday, hence the Monday sell-off.

Although Salesforce is quite the eager acquirer of complementary assets, this would be a big swallow. Informatica’s current market cap is over $10 billion, which would make the company one of Salesforce’s priciest buys. So far, its record high is the $28 billion deal for corporate communications-software specialist Slack it closed in 2021.

It was not clear how Salesforce intends to finance the Informatica deal, assuming the two companies can reach agreement on a buyout. Its own stock has been on quite the run thanks in no small part to the company’s incorporation of artificial intelligence (AI) functionalities in its offerings. For months now, investors have been very eager to own companies involved in some way with advancing AI technology.

Buyer, beware

Neither Informatica nor Salesforce has yet commented on the Journal article, and they are not likely to until an agreement is finalized. At this point, such a deal has to be considered speculative, so investors should approach with care.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.

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