Salesforce acquires workplace messaging app Slack for $27.7bn

Salesforce has agreed to buy workplace messaging app Slack for $27.7bn (£20bn) in what would be one of the biggest tech mergers in recent years.

Marc Benioff, boss of the business software giant, called the deal a “match made in heaven”.

He has been pushing to expand the company’s software offerings and fend off rivals such as Microsoft.

The acquisition comes as the pandemic has increased the focus on remote work and tools, like Slack, which enables it.

Tech analyst Dan Ives of Wedbush Securities called it a “now or never” purchase for Mr Benioff.

“If Salesforce wants to expand beyond its core gold mine of sales and marketing departments … this was the moment and thus represents a major shot across the bow against Microsoft,” he wrote in a note to investors after the deal was announced.

Slack, founded in 2009, has won a following with its group chats, which offer an alternative to email.

When it listed its shares publicly in 2019, it was valued at roughly $20bn.

However, its shares sank after the launch and have missed out on the stratospheric rise enjoyed by other tech firms this year.

The company, which had about 12.5 million users as of late March, has had difficulty making inroads against Microsoft Teams, a similar product that the tech giant unveiled in 2016 and now has more than 100 million users.

Taking on a giant

The two companies hope that the tie-up will put them in a better position to take on a number of enterprise software competitors, and in particular Microsoft.

Microsoft’s business applications have seen a massive surge as large numbers of people shifted to work-from-home arrangements due to the Covid-19 pandemic.

Microsoft’s business suite includes features that are similar to Slack’s messaging service.

The tech giant’ CEO Satya Nadella remarked earlier this year that “We’ve seen two years worth of digital transformation in two months”

Both Salesforce and Slack have had previous run-ins with Microsoft.

In 2016, Salesforce lost out to its bigger rival when it attempted to buy the business-focused social media service LinkedIn.

This summer, Slack brought a competition complaint against Microsoft in the European Union, saying the firm was abusing its market dominance by bundling Teams into its other products.

Under the terms of the Salesforce deal, Slack shareholders are to receive $26.79 in cash per share – roughly what they were worth at the beginning of November before rumours of the acquisition pushed the price per share to more than $43 as of Tuesday. They will also receive some shares in Salesforce.

The deal, which will be reviewed by Slack shareholders, is expected to close next year.

  

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