puts $1bn to work to buy parts of its Marketing Cloud

Contact: Brenon Daly has now shelled out a cool billion dollars to acquire the makings of its Marketing Cloud. The marketing offering, which is built on the back of the company’s two largest acquisitions, represents the most significant push to grow beyond the on-demand sales force automation product that it’s primarily known for. At stake: billions of dollars of market value for the richly valued SaaS kingpin.

On Monday, the company announced that it will pay $689m in cash and stock for Buddy Media, a social media marketing platform that counts 8 of the 10 largest advertisers as clients. The business, which should officially become part of by the end of October, will be combined with Radian6, a social media monitoring startup that picked up a little over a year ago for $326m.

Both transactions valued the target companies at a double-digit price-to-trailing-sales multiple. Buddy Media is being valued at an eye-popping 27 times 2011 revenue, roughly twice the valuation that Radian6 garnered. For its part, trades a little above 7x trailing sales. has shown through its M&A program – where it has acquired core parts of not only its Marketing Cloud, but also its Service Cloud offering – that the company is acutely aware that it can’t sustain an above-market valuation on a single product. With its platform being built on ever-pricier acquisitions, is gambling that it can use M&A to pull off a portfolio expansion that precious few software vendors have done successfully. To date, it’s been hard to bet against the company: Since its shares came public almost eight years ago, is up more than 700%, compared to a flatline S&P 500 over that same period.

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