Salesforce confirmed its plan to acquire Slack and revealed the purchase price, $27.7 billion in cash and stock, perhaps not coincidentally topping Microsoft’s $26.2 billion LinkedIn acquisition in the rankings of the largest tech deals of all time.
If the deal works out as Marc Benioff and Stewart Butterfield hope, it won’t be the last time the two San Francisco companies best the Redmond tech giant.
Salesforce and Slack “will shape the future of enterprise software,” said Benioff, the Salesforce CEO, in a statement announcing the deal.
“The opportunity we see together is massive,” added Butterfield, the Slack CEO.
Despite feeling like I had a decade’s worth of CEOing in the last 18 months, today’s news inspires a lot of excitement about the decade to come.
I was told that people on the internet may have opinions, so thought I’d offer mine…
(Bonus: a disclaimer) https://t.co/ajzr4a4uYG
— Stewart Butterfield (@stewart) December 1, 2020
Microsoft went unmentioned, of course, but it’s the biggest target. Analysts say the complementary strengths of Salesforce and Slack, in cloud-based customer relationship management and workplace messaging, respectively, promise to create a formidable new competitor for Microsoft in enterprise technology.
Box CEO Aaron Levie, who grew up near Microsoft in Mercer Island, Wash., wrote on Twitter that the deal “fundamentally re-orders the enterprise software landscape, giving Slack a new level of scale and creating all new opportunities across the entire ecosystem.”
Boom! Slack + Salesforce is huge. This move fundamentally re-orders the enterprise software landscape, giving Slack a new level of scale and creating all new opportunities across the entire ecosystem. Congrats to @Benioff and @stewart for making it happen!
— Aaron Levie (@levie) December 1, 2020
It was a “now or never” deal for Benioff, said Wedbush analyst Daniel Ives.
“Microsoft with its Azure/Office 365 cloud stack and Teams enterprise messaging solution set has dominated the cloud over the past few years and accelerated its growth during this COVID backdrop,” Ives wrote in a note to clients. “If Salesforce wants to expand beyond its core gold mine of sales and marketing departments and further into the enterprise, this was the moment and thus represents a major shot across the bow against Microsoft.”
In the announcement, Salesforce said Slack will be “deeply integrated into every Salesforce Cloud.”
The deal combines two allies of Amazon Web Services, which provides the underlying infrastructure for the Slack and Salesforce video features through its AWS Chime technology, and partners with Salesforce to sell its customer service software.
In an interview with CNBC this morning, AWS CEO Andy Jassy called them “very important, significant long-term strategic partners,” and said Amazon “will look to build products alongside them to continue to grow the business for both of us.”
Slack has clearly been one of the standout software companies during the pandemic. But ppl have been skittish about it because 1) its revenue growth hasn't been as insane as Zoom's 2) it faces competition from products like Teams.
— Lauren Masks Are Goode (@LaurenGoode) December 1, 2020
One of the areas where Amazon could help the combined Salesforce-Slack is in creating a more competitive video calling and virtual meeting solution. That has been a weak point for Slack, impacting its growth potential as Microsoft, Zoom and others benefit from the boom in video conferencing due to the pandemic.
Salesforce has dabbled in messaging and social media with mixed results in the past, with its Chatter messaging technology and its 2016 acquisition of collaborative document platform Quip for a reported $750 million. Salesforce lost out to Microsoft in a bitterly fought battle for LinkedIn in 2016.
The deal is slated to close in the quarter ending in July 2021, the second quarter of Salesforce’s 2022 fiscal year. It’s subject to regulatory review and a Slack shareholder vote. The boards of directors of both companies have approved the deal, and Salesforce says it has reached an agreement with Slack shareholders representing more than half of the outstanding voting power of Slack common stock.
Upon completion, the acquisition of Slack would be the largest in Salesforce history, topping its $15.7 billion acquisition last year of Tableau Software, the Seattle-based data visualization company. Salesforce says Slack will be an operating unit within the company, run by Butterfield as CEO, much as Tableau CEO Adam Selipsky has remained in that role.
