Salesforce.com
The transaction, Salesforce’s largest-ever acquisition, is expected to close by the end of July, the San Francisco-based company said Tuesday in a statement. Slack investors will receive $26.78 for each company share as well as 0.0776 share of Salesforce — representing a 55% premium to Slack’s price on Nov. 24, the day before reports about deal talks between the companies.
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Salesforce chief executive officer Marc Benioff has orchestrated more than 60 acquisitions in 21 years, taking his company from dot-com era upstart to a titan of cloud computing. The Slack deal would give Salesforce, the leader in programs for managing customer relationships, another angle of attack against Microsoft, which has itself become a major force in internet-based computing. Microsoft’s Teams product, which offers a workplace chatroom, automation tools and videoconference hosting, is a top rival to Slack.
“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,” Benioff said in the statement.
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.
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“The opportunity we see together is massive,” Butterfield said in the statement. “This is the most strategic combination in the history of software, and I can’t wait to get going.”
Salesforce, among the first of the fast-growing cloud software companies when it went public in 2004, strives to generate year-over-year revenue increases of more than 25%. Slack, which is expected to increase its sales almost 40% to $877 million this fiscal year, could help that effort. Slack, launched in 2013, went public via a direct listing in 2019. Bloomberg News and other publications reported that companies including Amazon.com, Microsoft and Alphabet's Google expressed interest in buying Slack at various times when it was still private.
Benioff for years has turned to acquisitions to keep his product lineup fresh. He has set an annual revenue goal of $35 billion for Salesforce by fiscal 2024, compared with $17 billion in fiscal 2020. The company bought analytics firm Tableau Software in an all-stock deal valued at $15.3 billion last year, which was Salesforce’s biggest acquisition at the time. The year before, in 2018, Benioff took over MuleSoft for $6.5 billion.
Benioff, who just three months ago said he didn’t foresee making any acquisitions given the economic environment, praised Chief Operating Officer Bret Taylor for organizing the deal with Butterfield, then pitching him on the idea.
“What’s very exciting is this vision that Stewart and Bret have put together,” he said in a conference call. “It’s a wow.”
Taylor, who sold his productivity software company, Quip, to Salesforce in 2016, said Slack will be deeply integrated with the app maker’s software suite to help its customers’ employees.
“It really is about facilitating this all-digital, work-from-anywhere world, to enable team selling, to enable people in a contact center to swarm on a case digitally whether or not you’re in the same building, to enable marketers to plan a campaign,” Taylor said.
Salesforce ownership will mark a new era for Slack, a tech upstart with the lofty goal of trying to replace the need for business emails. The cloud-software giant may be able to sell Slack’s chatroom product to existing customers around the world, making it even more popular. Slack said in March that it had reached 12.5 million users who were simultaneously connected on its platform, which has grown more essential while corporate employees work from home during the coronavirus pandemic. Slack has boosted revenue in the midst of COVID-19, but the company’s billings have been underwhelming because of shaky demand from small and mid-sized clients.
Meanwhile, use of Microsoft Teams has jumped during the pandemic, and Slack has taken issue with the company’s business tactics. In July, Slack complained to the European Union that Microsoft had broken antitrust law and should be investigated.
“Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers,” Slack said in a statement at the time. Microsoft, which integrates its products with Slack, has denied any wrongdoing.
