Q: Who will acquire Zoom: Amazon, Oracle, Adobe, or IBM?
Zoom currently has a $74b market cap. To acquire a successful public company, you have to pay a “premium”, i.e. 25%-50% (sometimes more) beyond its current market capitalization.
So let’s say it would cost $125 billion to acquire Zoom today (assuming they would sell). A 66% premium given its strong position.
Who can afford that … assuming the company would even sell?
- Salesforce can’t really afford it. Salesforce is “only” worth $180b itself.
- Oracle can’t really afford it. Oracle also is “only” worth $170b.
- Adobe can’t really afford it. Adobe is “only” worth $215b and generally acquires companies a bit on the cheap. Certainly, they’ve never paid anything near this.
- Cisco can’t really afford it. It would make a lot of sense for Cisco, but with “only” a $198b market cap, again Zoom is too expensive.
- IBM — nope. Again, just a $112b market cap. And IBM doesn’t have a history of company-risking bets.
- Microsoft could. It’s now worth $1.6 trillion. But it would be a huge bet — almost 10% of its value.
- Google could … but. Google is now worth $1 trillion, and has a history of making big bets that paid off. But would it spend 12.5% of its market cap to buy Zoom? Is it really core enough to make such a huge bet?
- Amazon could. It’s also now worth $1.6 trillion. But Amazon hasn’t yet really paid up at the application layer.
- Apple could but this seems highly unlikely. Their acquisitions have been smaller and strategic.
Realistically, Zoom is too big in terms of market capitalization to be acquired. At least for now.
Maybe it’s for the best. Salesforce was shopped around a number of times, but never acquired. Today, now, it’s worth more than Oracle. And Oracle turned down buying Salesforce earlier for a fraction of its current $180b market cap …