Salesforce to Acquire Slack in $27.7 Billion Megadeal

Slack
  • On Tuesday, Salesforce revealed a $27.7 billion deal to acquire Slack, an online collaboration company, bringing a wider variety of tools to the enterprise tech firm as the pandemic sparks a remote work trend.
  • The merger, which is scheduled to close next year awaiting shareholder and regulatory approval, has been accepted by the boards of both companies.
  • According to analyst Patrick Moorhead of Moor Insights and Strategy, Salesforce and Microsoft have long competed when it comes to services or software for firms to attract and retain clients.
  • Visit The Financial Today’s homepage for more stories.

SAN FRANCISCO — On Tuesday, Salesforce revealed a $27.7 billion deal to acquire Slack, an online collaboration company, bringing a wider variety of tools to the enterprise tech firm as the pandemic sparks a remote work trend.

Salesforce, headquartered in San Francisco, will be integrating Slack messaging technology with its marketing and sales team management platform.

“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,” Marc Benioff, chief executive of Salesforce, said in a statement.

The arrangement offers Salesforce the popular Slack-developed workplace communications software that has faced increased challenges from video-based services such as Zoom since the coronavirus pandemic.

Slack co-founder and CEO Stewart Butterfield said, “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.”

The merger, which is scheduled to close next year awaiting shareholder and regulatory approval, has been accepted by the boards of both companies.

According to Wedbush Securities analyst Dan Ives, a key factor for the acquisition is to keep pace with “cloud behemoth” Microsoft and its famous productivity platform, including Office 365 and Teams online communication program.

Due to a remote work trend intensified by the pandemic, Microsoft’s services that were already widely used by businesses have gained much more prominence, Ives said.

According to analyst Patrick Moorhead of Moor Insights and Strategy, Salesforce and Microsoft have long competed when it comes to services or software for firms to attract and retain clients.

In the field of online collaboration and productivity, the acquisition of Slack should enable Salesforce to challenge Microsoft, Moorhead said.

“This isn’t going to be easy for Salesforce and could require Salesforce to make many more investments into video and personal productivity,” Moorhead said.

The analyst concluded that Salesforce might require a company such as videoconferencing star Zoom to build a suite of apps to compete with the widely popular Microsoft 365 suite and Teams video conferencing software.

According to Moorhead, it is likely to be challenging to lure businesses away from Microsoft tools they are accustomed to using, but Slack has the advantage of being perceived as simple to use.

“I don’t see Microsoft customers leaving Teams and replacing it with Slack post-acquisition, or it would have already happened when Microsoft was more vulnerable.”

On the takeover news, Salesforce shares slipped more than three percent in after-market trading, while Slack shares slipped a fraction of a percent. 

Image by ajay_suresh; AFP contributed to this story.

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