Activist investor Elliott takes stake in Slack owner Salesforce | Technology sector

American activist investment 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 in how they are managed, said he looked forward to working “constructively” with the San Francisco-based company, without disclosing any strategic proposals.

“We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” Jesse Cohn, 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 preeminent software companies in the world,” adding that he “developed a deep respect for [Salesforce’s co-chief executive] Marc Benioff and what he built”.

However, Elliott, led by founder and co-CEO Paul Singer, is known for the aggressive tactics associated with activist firms. In 2021, British drugmaker GlakoSmithKline, now known as GSK, resisted Elliott’s attempts to get its CEO Emma Walmsley to reapply for her job before the company underwent a restructuring. In the same year, Elliott accused British energy company SSE of having a “loose” business plan.

In 2012, a dispute with Argentina over sovereign debt owned by Elliott led to the temporary seizure of an Argentine naval vessel in Ghana. Elliott also buys businesses and owns the British bookstore chain Waterstones.

Salesforce has been contacted for comment. Benioff co-founded the company and will be the sole boss when fellow CEO Brett Taylor leaves at the end of this month.

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

“As our revenues accelerated through the pandemic, we hired too many people which led to this economic downturn we now face, and I take responsibility for that,” Benioff wrote.

Major US technology companies have made a series of layoff announcements in recent months with Alphabet, the owner of Google, the latest to reveal plans to cut jobs, saying on Friday it would cut its global workforce by 12,000.

Elliott has made many technology-focused investments. She recently won a board seat at Pinterest, the online pinboard business, when the company added Elliott portfolio manager Mark Steinberg as a director.

Salesforce is valued at $151bn (£122bn) but its share price has fallen 32 per cent 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 “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 posted an undisclosed stake and said Salesforce was suffering from a valuation discount due to a “weak mix of growth and profitability.”

Starboard CEO Jeffrey Smith said at the time that his firm had been in contact with management and that the new executives, including Taylor who was promoted to a Salesforce role in November 2021, were better focused on balancing growth aspirations and profitability.

Elliott has been approached for comment.

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