Salesforce raises $1 billion, builds cash hoard

Summary:Salesforce said it will use the proceeds for "general corporate purposes, including funding possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital and capital expenditures."

Salesforce said Monday it will float $1 billion in convertible debt to build its war chest for corporate purposes including acquisitions.

Specifically, Salesforce will float convertible bonds due in 2018. Institutions that buy the bonds will be able to acquire another $150 million to cover overallotments.

The problem with convertible bonds is that they ultimately convert to shares and dilute investors. Salesforce said it will set up programs to minimize the dilution via hedging.

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Salesforce said it will use the proceeds for "general corporate purposes, including funding possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital and capital expenditures."

The move to raise cash comes as Salesforce is retooling its message and strategy to focus on building customer driven companies. The company reported strong fourth quarter results and is raising money at a good time given interest rates and its stock price.

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Topics: Cloud, Enterprise Software, Salesforce.com

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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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