Reasons why Informatica stock plummeted on Monday

On Monday, the enterprise cloud data grueling expertInformatica firms(New York Stock Exchange)Stock Code(INFA)Shares of Informatica are actively traded. That's not necessarily a good thing, as the company has clearly been the target of a takeover bid and its shares will change hands at a discount, and Informatica's shares closed down nearly 7% last day, a significantly larger drop than the price of the stock.Standard & Poor's 500The index is down 1.2%.

Sources say it's a takeover target

Last Friday night.The Wall Street Journal.Informatica is reportedly working with customer relationship management (CRM) giantSalesforce (NYSE: CRM)negotiating a buyout. Citing unnamed "people familiar with the matter," the newspaper wrote that the price per share being discussed was below Informatica's closing price of $38.48 on Friday, hence the sell-off on Monday.

Despite Salesforce's enthusiasm for acquiring complementary assets, this will be a big deal, and Informatica's current market capitalization of more than $10 billion would make it one of Salesforce's most expensive acquisitions. To date, Salesforce's highest-ever acquisition was the $28 billion deal it completed in 2021 for enterprise communications software specialist Slack.

It's unclear how Salesforce intends to finance the Informatica deal, assuming the two companies can reach an agreement on the acquisition.Informatica's stock has been on a tear, thanks in large part to the company's incorporation of artificial intelligence (AI) capabilities into its products. For months, investors have been keen to own companies that are in some way tied to the development of AI technology.

Buyer beware.

Neither Informatica nor Salesforce has any knowledge about theThe Daily NewsThey have commented on this article and are unlikely to do so until the deal is finalized. For now, such a deal can only be considered speculative and should be treated with caution by investors.

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Eric Volkman does not own any of the stocks mentioned above.The Motley Fool holds a recommendation for Salesforce.The Motley Fool has a disclosure policy.

Why did Informatica stock plunge on Monday?