Salesforce's board met on March 2, and authorized management to keep the negotiations going and submit a proposal to buy MuleSoft. The two companies signed a confidentiality agreement, and Salesforce presented MuleSoft with its initial $38 bid, which a few days later MuleSoft successfully pushed up by 18 percent.
On March 7 and 8, Somorjai called Schott to talk about the terms of a deal. Schott said the MuleSoft board only wanted cash, but Somorjai said a deal would have to include some Salesforce stock. It ultimately included 80 percent cash and 20 percent stock.
According to Salesforce's valuation analysis as conducted by Goldman Sachs, the company is paying 10.4 times forward revenue for MuleSoft, a multiple that, among relevant deals, is only eclipsed by the price-to-sales ratio of 12.2 that Cisco paid for AppDynamics last year.
Salesforce shares have dropped 7.8 percent since the deal was announced, falling more than the broader market. But even with the premium Salesforce is paying and the fact that no other bidders appear to have emerged, Kirk Materne, an analyst at Evercore ISI, expressed optimism on the purchase.
"We believe the potential upside from the deal when looking out to CY19 and beyond is underappreciated," wrote Materne, who has a "buy" rating on the stock. "We see the recent pullback creating an attractive entry point for long-term investors."