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.
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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:
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?