Salesforce announced Tuesday that it will acquire the professional communications platform Slack in a $27.7 billion cash-and-share deal.
The deal is Salesforce’s largest purchase to date and the largest software deal since 2018, when IBM announced that it would buy open-source software company Red Hat, and is seen as an opportunity for Salesforce and Slack to better position themselves against cloud services and software giant Microsoft, according to Axios.
“Combining Slack with Salesforce Customer 360 will be transformative for customers and the industry,” Salesforce wrote in a press release. “The combination will create the operating system for the new way to work, uniquely enabling companies to grow and succeed in the all-digital world.”
We are thrilled to be acquiring Slack!
Combining @SlackHQ with #Customer360 will be transformative, creating the operating system for the new way to work. Together, we’ll enable companies to grow and succeed in the all-digital, work-from-anywhere world.https://t.co/s8dwSFKEdy pic.twitter.com/mwIk4N6jZz
— Salesforce (@salesforce) December 1, 2020
“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, chairman and CEO of 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.”
The completed sale will end Slack’s tenure as an independent public company that fended off a number of other acquisition attempts from companies, including Google, Microsoft, and Amazon, according to the New York Times.
Founded in 2010, Slack went public in 2019 at a roughly $19.5 billion valuation. Shares sank, but the unprecedented shift to working from home en masse brought on by the coronavirus buoyed the company’s revenues to $216 million in the quarter ending July, though the company acknowledged that it did not expect that rise to continue.
“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 Stewart Butterfield, Slack CEO and co-founder. “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.”
Following the news of the acquisition, Slack’s market capitalization rose to more than $25 billion.
Microsoft has been a tough competitor in the communications sector for a comparatively small company such as Slack. Slack reported in 2019 that it had 12 million daily users. Microsoft reported that its Teams platform had more than 100 million daily users, up 50% from April.
“Together, Salesforce and Slack will give companies a single source of truth for their business and a unified platform for connecting employees, customers and partners with each other and the apps they use every day, all within their existing workflows,” Salesforce wrote.
