Salesforce CEO Marc Benioff paid an enormously high price for Demandware because of a bidding war

Salesforce on Wednesday announced its biggest acquisition to date, the $2.8 billion all-cash purchase of Demandware, which makes software for building web sites.

And speaking with CNBC's Jim Cramer, Marc Benioff confirmed what everyone was thinking: the price was so high because Salesforce got in a bidding war over this company.

Salesforce paid $75 a share. That's a 56% premium over the share price the day before, when it closed at just under $48. That's even higher than the bullish analysts target share prices which topped out at $65, according to Yahoo Finance.

Cramer asked Benioff about a research note from Piper Jaffray's Alex Zukin that published the day before the acquisition was announced. Zukin wrote that Demandware was ripe for an acquisition with possible bidders including Adobe, Oracle and IBM, other than Salesforce.

Benioff confirmed that a bidding war took place. "Yes, this was a very competitive deal."

He further explained (emphasis ours), "The M&A season is the most intense, most exciting I've ever seen. I've never seen more deals and more things happening. We're not winning every deal, this is just a deal we were able to get done. We're excited that we're actually able to get Demandware. It's tough to get deals done because everybody is actually positioning for growth for next year. I'm thrilled we got Demandware."

While Salesforce wouldn't confirm that Oracle was one of the bidders, and Oracle declined comment, that kind of "we won glee" implies that Benioff snatched this company away from one of his major competitors.

Another clue that Salesforce grabbed this company away from a major competitor: Salesforce is taking out a $500 million loan to help pay that premium price for Demandware. It expects the acquisition to decrease earnings per share by $.07.

However, Salesforce also expects Demandware to grow its revenues in its current fiscal year by around $100 million to $120 million, it says. 

Benioff is laser focused on bringing Salesforce revenues to $10 billion a year. It now expects to compete its current fiscal year with revenues of $8.26 billion to $8.32 billion and non-GAAP EPS is expected to be in the range of $0.93 to $0.95.

Demandware brings Salesforce into a whole new market.

The company offers cloud software for building ecommerce websites. Its customers read like a who's-who in the retail and fashion worlds, from Adidas through Uggs. Salesforce will create a new division called Commerce Cloud to sell storefront ecommerce software.

Benioff explains that Demandware and Salesforce have a lot of the same customers and that by combining the two those customers can now use Salesforce to sell stuff to customers (via Demandware) and to track customer data (via Salesforce's flagship customer relationship management software.)