Salesforce to buy workplace app Slack in $27.7 billion deal
SAN FRANCISCO: Salesforce.com Inc has agreed to buy workplace messaging app Slack Technologies Inc in a $27.7 billion deal, the biggest by the cloud-computing pioneer as it bets on an extended run for remote working and sharpens its rivalry with Microsoft.
The deal enables Salesforce to provide a unified platform for businesses to connect their employees, customers and partners with each other and the apps they use, bolstering its enterprise portfolio.
For Slack, the deal comes as it struggles to fully capitalise on the switch to remote working during the Covid-19 pandemic.
Slack changed workplace communications by focusing on real-time messaging that could be broken into conversations with groups assembled on the fly, a more nimble platform than email. But the messaging style that Slack helped create has become an extremely competitive space, with larger, older competitor Microsoft Corp. aggressively promoting its similar Teams product with integrated video and voice calling.
Microsoft has also bundled Teams with many of its office software packages, an added attraction for companies looking to save costs during the disruption caused by the outbreak.
“The deal allows Salesforce to get deeper into collaboration and business communication and it’s good for Slack, especially to grow their penetration into non-tech companies,” DA Davidson analyst Rishi Jaluria said.
Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, or $45.5 per share based on Salesforce’s closing price on Tuesday. The offer represents a premium of 54% since the first report emerged last week about the deal talks.
Salesforce CEO escalates rivalry with Microsoft
The purchase of Slack, an existing partner with less than $1 billion in annual revenue, fulfills Salesforce chief executive officer Marc Benioff’s long-held goal to make Salesforce’s software relevant to a broad swath of corporate employees, beyond the marketers and account representatives who log on to programmes each day. At stake is the chance for Salesforce to elevate itself to the very top of the software industry.
Benioff has what he calls a “$50 billion dream” for Salesforce’s annual revenue, which would surpass every maker of business applications short of Microsoft. He’s also further cementing Salesforce as Microsoft’s chief rival in business applications.