Salesforce.com plans $500 million term loan for Demandware purchase

By Sara Rosenberg

New York, June 1 – Salesforce.com Inc. has received a commitment for a $500 million three-year unsecured term loan to help fund its acquisition of Demandware, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

Bank of America Merrill Lynch is the lead arranger and bookrunner on the deal.

Pricing on the term loan can range from Libor plus 100 basis points to 175 bps based on leverage. Initial pricing is expected at Libor plus 125 bps.

The term loan has a springing maturity to 91 days prior to the maturity of the company’s existing 0.25% convertible senior notes due April 1, 2018, unless prior to that date the notes have been repaid, converted or refinanced or consolidated leverage is less than 3 times and liquidity is at least 1.25 times the aggregate outstanding principal balance of the notes.

There is no amortization on the term loan and no mandatory prepayments.

Under the agreement, Demandware is being bought for $75.00 per share, in cash. The transaction is valued at about $2.8 billion net of cash acquired.

Closing is expected in the second quarter of Salesforce’s fiscal year 2017, ending July 31, subject to customary conditions, including the acceptance of a majority of Demandware shares in a tender offer and expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Salesforce is a San Francisco-based cloud computing company. Demandware is a Burlington, Mass.-based provider of enterprise cloud commerce solutions.

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