Shares of Salesforce (CRM) are sliding after the company announced that it is acquiring MuleSoft (MULE) for $6.5B. Commenting on the news, several Wall Street analysts pointed out that while the acquisition makes strategic sense for Salesforce, the company paid a high valuation for the deal.

MULESOFT ACQUISITION: Last night, Salesforce announced a definitive agreement to acquire MuleSoft for an enterprise value of approximately $6.5B. Under the terms of the transaction, the MuleSoft acquisition consideration will be composed of $36 in cash and 0.0711 shares of Salesforce common stock per MuleSoft Class A and Class B common share, which represents a per share price for MuleSoft common shares of $44.89 based on the closing price of Salesforce common stock on March 19, 2018.

HIGHLY POSITIVE: Following the news, Piper Jaffray analyst Alex Zukin raised his price target for Salesforce to $140 from $135 as he is “highly positive” on the deal from a strategic standpoint. The analyst told investors that has long seen Salesforce as a logical potential acquirer given the familiarity with the asset and the fact that MuleSoft “goes hand in hand” with most digital transformation projects that Salesforce is pitching. Further, MuleSoft would enable a much deeper connection for Salesforce with its customers as it would serve not only as a platform or application vendor but as the connective tissue for digital transformation initiatives, he contended, reiterating an Overweight rating on the latter’s shares. Meanwhile, SunTrust analyst Terry Tillman told investors in a research note of his own that the acquisition is a “smart” deal, with MuleSoft offering about $10B of incremental total addressable market while strengthening the “infrastructure and platform story” of Salesforce. Wedbush analyst Steve Koenig voiced a similar opinion, saying that while the planned acquisition of MuleSoft comes at “dear multiples,” the deal makes strategic sense. The analyst argued that the acquisition solves a particular problem of Salesforce’s, namely the company’s laser focus on the front office requires bridging with back-office technologies and best-in-class leaders in other application domains if customers are to avoid departmental SaaS silos.