Salesforce to buy cloud co Heroku for $212M cash
In a move to expand its cloud computing efforts into mobile applications and social networking, salesforce.com Inc. said Wednesday that it will pay $212 million in cash for Heroku, which hosts developers' "apps" on its site for a fee.
Founded in 2007, San Francisco-based Heroku provides a standard computer language, dubbed Ruby, for software developers to use when writing code for their apps and then hosts the apps on its site, eliminating developers' need to invest in costly equipment such as servers. Developers use Heroku to write apps for the iPhone, among other kinds of smart phones, as well as sites such as Facebook. According to Heroku's website, more than 106,000 apps currently live on its servers.
Salesforce.com already has a Web presence in its own right. Now, it wants to encourage software developers to design more apps that will work with the website, making it more useful to its business customers.
"The next era of cloud computing is social, mobile and real-time. I call it Cloud 2," said Marc Benioff, salesforce.com's chairman and CEO. "Ruby is the language of Cloud 2."
In addition to the $212 million in cash, Salesforce will pay $27 million in stock to Heroku employees as well as $10 million in cash for unvested Heroku shares.
The maker of customer relationship management software said it doesn't expect Heroku to add to its revenue in the year ending Jan. 31, 2012. It expects the deal to trim fourth-quarter earnings by 2 cents per share and by 12 to 13 cents per share in fiscal 2012.
The deal is expected to close during salesforce.com's fiscal fourth quarter, which ends Jan. 31.
Shares rose $2.97, or 2 percent, to $148.21 in midday trading.