Salesforce.com has agreed to buy Slack Technologies for US$27.7-billion in cash and stock, giving the corporate software giant a popular workplace communications platform in one of the biggest technology deals of the year.
The transaction, Salesforce’s largest ever acquisition, is expected to close by the end of July, the San Francisco-based company said on Tuesday in a statement. Slack investors will receive $26.78 for each company share as well as 0.0776 share of Salesforce — representing a 55% premium to Slack’s price on 24 November, the day before reports about deal talks between the companies.
Salesforce CEO Marc Benioff has orchestrated more than 60 acquisitions in 21 years, taking his company from dot-com era upstart to a titan of cloud computing. The Slack deal would give Salesforce, the leader in programs for managing customer relationships, another angle of attack against Microsoft, which has itself become a major force in Internet-based computing. Microsoft’s Teams product, which offers a workplace chatroom, automation tools and video conference hosting, is a top rival to Slack.
“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,” Benioff said in the statement.
Stewart Butterfield, Slack’s co-founder and CEO, will continue to run the business as a Salesforce unit when the deal is completed, the companies said.
Salesforce’s shares declined about 4% in extended trading after closing at $241.35. The stock has jumped 48% this year. Slack’s shares were little changed after closing at $43.84. The stock has almost doubled in 2020, with about half of that gain coming since the acquisition talks were reported.
Fast-growing
Salesforce, among the first of the fast-growing cloud software companies when it went public in 2004, strives to generate year-over-year revenue increases of more than 25%. Slack, which is expected to increase its sales almost 40% to $877-million this fiscal year, could help that effort. Slack, launched in 2013, went public via a direct listing in 2019. Various publications reported that companies including Amazon.com, Microsoft and Google expressed interest in buying Slack at various times when it was still private.
Salesforce ownership will mark a new era for Slack, a hot tech upstart with the lofty goal of trying to replace the need for business e-mails. The cloud software giant may be able to sell Slack’s chatroom product to existing customers around the world, making it even more popular. Slack said in March that it had reached 12.5 million users who were simultaneously connected on its platform, which has grown more essential while corporate employees work from home during the coronavirus pandemic. Slack has boosted revenue in the midst of Covid-19, but the company’s billings have been underwhelming because of shaky demand from small and mid-sized clients.
Meanwhile, use of Microsoft Teams has jumped during the pandemic, and Slack has taken issue with the company’s business tactics. In July, Slack complained to the European Union that Microsoft had broken antitrust law and should be investigated.
“Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal and hiding the true cost to enterprise customers,” Slack said in a statement at the time. Microsoft, which integrates its products with Slack, has denied any wrongdoing. — Reported by Nico Grant, (c) 2020 Bloomberg LP
