Salesforce said on December 1st that it would buy the workplace software company Slack for $27.7 billion in cash and stock, the latest in a wave of deals as the coronavirus pandemic boosts demand for tools that enable people to work remotely.
The origins of Slack go back to 2009. The company was called Tiny Speck and was actually focused on the development of a multi-player game, known as Glitch. But there was not enough interest from users. So CEO Stewart Butterfield would ultimately shutdown the game.
With market capitalization now at $230 billion, Salesforce has been among the big winners from disruption due to the Covid-19 pandemic. Salesforce‘s strong growth has been spurred by rising demand for its online business software that supports remote work and business.
Salesforce’s acquisition fits well as part of its grand strategy to take on Microsoft. It is set to incorporate Slack as a unified front-end to access its business enterprise suite. Microsoft has positioned its Team as a gateway to its other business application offerings.
Stewart Butterfield, Slack’s co-founder and CEO, will continue to run the business as a Salesforce unit when the deal is completed. He said he is excited to join the company that sparked the cloud revolution.
“Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it,” said Marc Benioff, Chair and CEO, Salesforce. “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.”
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 December 1st 2020.
The offer represents a premium of 54 percent since the first report emerged last week about the deal talks. Slack shares fell marginally to $43.73 in extended trading on December 1st 2020, while Salesforce’s stock declined above 4 percent .
It would be interesting to see how the Salesforce-Slack deal wins users and customers and convince them to switch to Salesforce from Microsoft.