Salesforce.com inc

Remember the last deal salesforce.com, inc. (NYSE:CRM) did?

They bought Buddy Media. The deal included $467 million in cash, $184 million in Salesforce stock and $38 million in vested options and restricted stock. Additional payments would be made if certain milestones were met, making the total amount as much as $745 million.

Here is what the folks at Buddy Media had to say when the deal was announced

Pretty powerful combination and ought to drive salesforce.com, inc. (NYSE:CRM) and its business and its stock ever higher…..right?

Well, CRM filed an S-3 regarding those shares paid to Buddy Media folks…..

How much of the stock they received in this new combined entity are they selling? The answer: 99%

Here is the list:

Capture607 624x95 Even Buddy Media Folks Dont Want CRM Stock

Now, I get founders want to cash in on their hard work and monetize the asset. Really I do. But they did get $467M in cash, that is a bit of liquidity. This isn’t even a liquidity issue, this is a clean break.

When a company is hot to use its stock to acquire other companies, it means even they realize the value of that stock is overstated. When $1 of stock is worth much more than $1 of cash, you use it as a currency. Even those receiving it in this case realize that and are cashing in before that $1 of stock is in fact only worth $1.

So again, I ask the question. If insiders are selling the stock on a weekly basis, often exercising options years early and even companies they acquire dump the stock they get as soon as they are allowed to…..why is anyone else buying it?

By: valueplays