It is official. Salesforce, the cloud computing giant, has announced that it is buying workplace chat app Slack. There were rumours about the mega deal last week, but it is now official and it marks Salesforce’s biggest purchase ever.
According to a press release by Salesforce, the San Francisco-based company is paying USD27.7 billion (~RM112.9 billion) to buy Slack. The announcement reads:
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.
Following the deal, Salesforce says it plans to integrate Slack’s messaging technology with its platform for managing marketing and sales teams.
Both Salesforce and Slack’s respective chief executive officers (CEOs) issued statements, praising the deal. Salesforce’s chair and chief executive officer Marc Benioff called the acquisition 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 (“family” in Hawaiian) once the transaction closes,” said Benioff.
Slack CEO Stewart Butterfield added, “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.”
Slack has an interesting origin story, though it was founded in 2013, it was actually started as a gaming company called Glitch in 2009. Though the game failed, the company developed an internal messaging system that later evolved into Slack.
Founded and led by Flickr co-creator Butterfield, the company in turn grew Slack into a full productivity suite with video meeting features, file hosting, IT administration which are typically offered by an enterprise corporation. Just earlier this year, Slack expanded its partnership with IBM to include the company’s entire 350,000 workforce.
Slack now boasts more than 12 million daily active users as of October 2019 and has a market value close to USD25 billion. There is a good chance that number is much higher now, though we don’t know by how much exactly as the company does not disclose its numbers.
But it has not all been smooth sailing for Slack as the company also struggled in the face of fierce competition from Microsoft, Facebook and other companies that launched competing versions of the app. Adding to that, the company lost 40% of its market value after it went public in April 2019.
With the acquisition of Slack, Salesforce is now a major competitor to Microsoft in the area of online collaboration and productivity. Salesforce has grown to become one of the largest software companies in the world, thanks in large part to its customer relationship management software.
Both Slack and Salesforce have been even more vital during the COVID-19 pandemic with companies worldwide moving to remote working and moved substantial portions of their business online.