A week after the nation’s fastest-growing CEO Magazine reported on a potential Salesforce acquisition of Slack, comes the announcement of a successful deal. Salesforce, the global industry leader for CRM applications, is acquiring workplace communications app Slack for $27.7 billion. The deal marks one of the largest acquisitions made in the business software industries in recent years and Salesforce’s biggest acquisition ever in its 21-year history.
According to the official press release, Salesforce is buying Slack for $27.7 billion. The deal is expected to be half cash and half stock.
“Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020,” the announcement reads.
Shares of Slack jumped about 4% Monday on the news. Salesforce shares fell more than 3% amid the news that it will buy Slack using a large equity component.
Salesforce and Slack are neighbors in San Francisco’s Transbay distract. The 62-story Salesforce Tower, the tallest building in Northern California, is only a throw away from Slack which is headquartered across Salesforce Park in a shorter building.
Takeover aimed at competing Microsoft
Salesforce acquisition of Slack could spell trouble for Microsoft. The two companies have shared the biggest rivalry in the history of business services and software industry. In 2015, Microsoft made a $55 billion acquisition offer to Salesforce in what could have been the largest acquisition in the niche-corporate software industry. The talks fizzled over price. A year later, the two rivals battled each other in a fierce battle over LinkedIn. Microsoft won the round, but not without antitrust scrutiny called upon by Salesforce. Time and again, Salesforce and Microsoft have made desperate attempts to be the bigger force in the business software industry.
With Slack on its armor, Salesforce will finally have something against Microsoft’s growing platform Dynamics 365. In recent years, Dynamics 365 has posed a unique threat to Salesforce’s bread-and-butter; Sales Cloud. In Q2 2020, Dynamics 365 grew 39 percent from the same period a year ago, which is faster than any other Microsoft product.
On the other hand, Slack would get the much-needed boost to squash Zoom and Microsoft Team. Unlike Slack, the two tools were successfully able to figure out how to fully monetize on the switch to remote working.
With Salesforce acquiring Slack, it can finally outflank Microsoft and become a market leader in cloud software for companies. Salesforce could tap into Slack’s market share of fast-growing startups, and even cross-sell each other’s products to their respective customer bases, and thus, increasing the scope for higher revenues.
Back in 2016, Microsoft considered buying Slack for $8 billion when it was still a newcomer in the workplace applications space. Looks like the missed opportunity is going to cost Microsoft big bucks after all.
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