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Salesforce.com has accepted to buy Slack Technologies for $ 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, the largest acquisition ever made by Salesforce, is expected to close in late July, the San Francisco-based company said Tuesday in a statement. Slack investors will receive $ 26.78 for each share in the company, as well as 0.0776 shares of Salesforce, representing a 55% premium over Slack’s price on November 24, the day before reports on negotiation of agreements between companies.
Salesforce CEO Marc Benioff has orchestrated more than 60 acquisitions in 21 years, taking his company from the dot-com era to a cloud computing titan. The Slack deal would give Salesforce, the leader in customer relationship management programs, another angle of attack against Microsoft, which has become a major force in Internet-based computing. Microsoft’s Teams product, which offers a workplace chat room, automation tools, and video conferencing hosting, is a great rival to Slack.
“Together, Salesforce and Slack will shape the future of business software and transform the way everyone works in the fully digital world, where you work from anywhere,” Benioff said in the statement.
Stewart Butterfield, co-founder and CEO of Slack, will continue to run the business as a unit of Salesforce when the deal is completed, the companies said.
Shares of Salesforce fell about 4% in extended trading after closing at $ 241.35. The stock is up 48% this year. Shares of Slack changed shortly after closing at $ 43.84. The stock has nearly doubled in 2020, with about half of that profit coming since the acquisition talks were reported.
Fast growing
Salesforce, one of the first fast-growing cloud software companies when it went public in 2004, is striving to generate annual revenue increases of more than 25%. Slack, which is expected to increase its sales nearly 40% to $ 877 million this fiscal year, could help in that effort. Slack, launched in 2013, went public through a direct listing in 2019. Various publications reported that companies such as Amazon.com, Microsoft and Google expressed interest in buying Slack at various times when it was still private.
Ownership of Salesforce will usher in a new era for Slack, a technological upstart with the noble goal of trying to replace the need for business emails. The cloud software giant is able to sell Slack’s chat room 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 become more essential as corporate employees work from home during the coronavirus pandemic. Slack has increased revenue amid Covid-19, but the company’s turnover has been disappointing due to unstable demand from small and medium-sized customers.
Marc Benioff, CEO of Salesforce.com
Meanwhile, use of Microsoft Teams has increased during the pandemic, and Slack has opposed the company’s business tactics. In July, Slack complained to the European Union that Microsoft had violated antitrust law and should be investigated.
“Microsoft has illegally linked its Teams product to its market-dominant Office productivity suite, forcing it to be installed by the millions, blocking its removal and hiding the real cost from 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
