Salesforce has agreed to purchase online communications platform Slack for $27.7 billion. The CRM firm will pay Slack shareholders $26.79 in cash plus 0.0776 shares in Salesforce for each share. Salesforce, which has annual revenue over $20 billion, will fund the deal through new debt and cash assets. This is Salesforce’s largest acquisition to date, followed by Tableau which Salesforce acquired for $15.7 billion in 2019.
Each company’s board of directors have approved the transaction, and the Slack board is recommending that stockholders approve the transaction. Assuming the companies clear regulatory hurdles, the deal is expected to close in the second quarter of Salesforce’s fiscal year 2022.
Slack boasts customers including Starbucks, Target and TD Ameritrade in 150 countries, and the open platform integrates with more than 2,400 apps so people can collaborate and communicate.
CEO statements
“Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it. This is a match made in heaven. 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. I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes,” said Marc Benioff, Salesforce chairman and CEO, in a December 1 news release.
Stewart Butterfield, Slack CEO and co-founder, shared his thoughts about the acquisition.
“Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work. The opportunity we see together is massive,” said Butterfield. “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. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”
The pandemic is part of the impetus for the acquisition with so many companies, organizations and governments moving to a digital world with remote work and education becoming the new normal, at least for now. By combining forces, the two companies can provide customers with the CRM cloud services they need to do business, as well as the communications and collaboration tools they need to connect to each other.
“Together, Salesforce and Slack will create the most extensive open ecosystem of apps and workflows for business and empower millions of developers to build the next generation of apps, with clicks not code,” said Salesforce.
Slack Q3 FY2021 financials
On the same day Salesforce announced the acquisition deal, Slack released its third quarter financials for fiscal year 2021. Total revenue was $234.5 million, a 39% increase year-over-year, with calculate billings of $252.4 million, a 36% increase year over year. During the quarter, the company added 12,000 net new paid customers, a 140% increase year-over-year. Net loss attributable to Slack common stockholders was $68.4 million, or $0.12 basic and diluted net loss per share. TechCrunch reports that Slack’s current valuation is over $25 billion.
Insider Take
This huge acquisition allows Salesforce to move beyond its core CRM services, marketing services and data analytics. This gives the company substantial leverage to help it attract and retain customers. This marriage will also help Slack compete against Microsoft’s Teams offering and Zoom’s video services. According to Fortune, industry analysts predict that this acquisition will instigate other potential mergers and collaborations in the tech space.
