Salesforce To Acquire Slack

Salesforce To Acquire Slack For $27.7b
Salesforce To Buy Slack Technologies
Salesforce To Buy Slack

Cloud computing giant Salesforce said it will acquire workplace messaging service Slack in a deal valued at $27.7 billion.

Salesforce To Acquire Slack For $27.7b

Saleforce said Slack will be 'deeply integrated into every Salesforce Cloud' and become the new interface for Salesforce Customer 360. When combined, Salesforce and Slack will 'create the most extensive open ecosystem of apps and workflows for business and empower millions of developers to build the next generation of apps, with clicks not code,' according to the companies.

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Tech industry analysts speculate the deal is partly a way for Salesforce to compete with fellow cloud computing giant Microsoft, which owns its own suite of Teams workplace messaging software. Dan Ives, managing director of equity research at Wedbush Securities, said in a memo that keeping pace with Microsoft was the 'core reason for this deal.'

Ives also noted that with more people working from home 'messaging platforms such as Zoom, Slack, and Teams have revolutionized the way that enterprises view collaboration software going forward.'

Even after a vaccine is readily available and employees begin returning to the office in 2021, Ives noted, this type of software will only become 'further embedded in enterprise initiatives.'

Salesforce, a cloud-services company that targets businesses, has announced that it will acquire workplace communication service Slack for $27.7 billion. The announcement follows a week of rumors and a steep bump in Slack's value on the stock market in anticipation of the deal being made official.

Neither company has yet to announce in any detail what this will mean for users and customers. Salesforce is sure to include Slack in some of its broader bundles, and to more tightly integrate Slack with its other software services. 'Slack will be deeply integrated into every Salesforce Cloud' and will become 'the new interface for Salesforce Customer 360,' the press release says.

But anything else beyond that is speculation at this point. New features and development priorities or adjusted pricing models are possibilities, but we also don't yet know when any user-relevant changes related to this acquisition will actually take place, either.

While Salesforce and Slack signed a definitive merger agreement, the deal is not final. 'The transaction is anticipated to close in the second quarter of Salesforce's fiscal year 2022, subject to approval by the Slack stockholders, the receipt of required regulatory approvals, and other customary closing conditions,' Salesforce's announcement said. The second quarter of Salesforce's fiscal year 2022 will end on July 31, 2021. The deal could be reviewed by the incoming Biden administration.

The mutual benefits for Slack and Salesforce as businesses are clear, even if it's wait-and-see in terms of any benefits or downsides for users and customers. Salesforce is in a fierce competition with Microsoft to win over businesses that are in the market for cloud-based services and products. Microsoft runs arguably the most significant Slack competitor, Microsoft Teams, but Salesforce had not matched either Slack or Teams with an equivalent offering.

The Slack acquisition bolsters Salesforce's portfolio of services as it tries to sign businesses on to deals that would make Salesforce more or less a one-stop shop for those businesses.

Slack, on the other hand, has struggled somewhat since its initial public offering (IPO) last year, despite the COVID-19 pandemic accelerating a remote-work revolution that one would expect to benefit a remote communications tool for businesses. The company has struggled on its profitability path, and its valuation has fluctuated since the IPO but has rarely grown significantly beyond its initial price.

Slack's valuation on the market leaped dramatically since the rumors of the acquisition broke; in early November, the company's shares were valued as low as $24.10. After market close today, shares were up to $43.84.

Salesforce To Buy Slack Technologies

As is usually the case with announcements like this, executives from both companies released statements. Here's the word from Salesforce CEO Marc Benioff:

[Slack CEO Stewart Butterfield] and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it... This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world. I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes.

And from Slack's Butterfield (who previously founded photo-sharing website Flickr and the failed gaming platform Glitch):

Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work. The opportunity we see together is massive... As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.

Salesforce To Buy Slack

'Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020,' the press release says.

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