In its biggest-ever acquisition, cloud software company Salesforce.com Inc. agreed Monday to acquire venture capital-backed Buddy Media Inc., a social media marketing firm, for about $689 million in cash and stock.
Terms of the transaction call for San Francisco's Salesforce to pay $467 million in cash, $184 million in common stock and another $38 million in restricted stock.
The deal underscores technology companies' growing appetite for social media marketers. Oracle Corp. recently made a similar move with its acquisition last month of social media marketing company Virtue for a reported $300 million.
Founded in 2007, Buddy Media of New York makes software that enables companies to analyze the effectiveness of their advertising on social networks such as Facebook Inc., LinkedIn Corp. and Twitter Inc. Its client list includes Ford Motor Co., Hewlett-Packard Co. and Mattel Inc.
Salesforce expects Buddy Media to add up to $25 million in revenue and reduce its earnings per share by about 15 cents for the fiscal year ending Jan. 31, 2013. The company expects to complete the transaction by Oct. 31, pending regulatory approval.
"With CMOs (chief marketing officers) surpassing CIOs in spending on technology within the next five years, our marketing cloud leadership will allow us to capitalize on this massive opportunity," Salesforce chairman and CEO Marc Benioff said in a statement.
Bay Partners, GGV Capital, Insight Venture Partners LLC and Institutional Venture Partners are among Buddy Media's backers.
Before Monday's transaction, Buddy Media began looking for acquisitions on its own. In February, the company purchased social media ad management company Brighter Option for undisclosed terms, and about a year ago it paid an undisclosed sum for SpinBack Inc.
Buddy Media founder and current chief executive Michael Lazerow told The Daily Deal in a recent interview that he was going to keep an eye out for additional deals, but had not ruled out the possibility of Buddy Media going public or being acquired itself down the road.
"The best time to sell is when you aren't necessarily looking to sell. And that's what happened with our discussions with Salesforce.com," Lazerow wrote in a Monday blog posted on his company's website.
Buddy Media's board and stockholders have approved the deal.
Before Buddy Media, the last acquisition Salesforce made came in September when it picked up customer service technology maker Assistly Inc. for $50 million in cash.
Salesforce shares opened 1% lower on Monday morning at $129, giving it a market capitalization of around $18 billion.