Salesforce to Acquire Slack for $27.7 Billion

Posted on December 1, 2020 by Paul Thurrott in Cloud, Microsoft 365 with 29 Comments

Salesforce announced today that it will acquire struggling Slack for $27.7 billion in a bid to turn around the flailing maker of a chat-based productivity app. That’s an incredible sum for a firm that has lost 40 percent of its value since it went public and has posted two sequential quarterly losses in a year in which its type of service should be more popular than ever.

“Stewart [Butterfield] and his team [at Slack] have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it,” Salesforce chairman and CEO Marc Benioff said in a prepared statement. “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 [internal support system] once the transaction closes.”

According to the terms of the deal, Salesforce will pay Slack shareholders $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. Slack will become an operating unit of Salesforce and will continue to be led by its current CEO, Stewart Butterfield.

According to Salesforce, it intends to use the Slack acquisition to build an “operating system for the new way to work,” a unified platform by which it will connect employees, customers, and partners with each other and the apps they use. More specifically, it will deeply integrate Slack with Salesforce’s cloud services and make Slack “the new interface for Salesforce Customer 360.”

Good luck with that, Salesforce.

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Comments (32)

32 responses to “Salesforce to Acquire Slack for $27.7 Billion”

  1. Avatar

    illuminated

    Idea looks great but integrating different companies is extremely difficult. As far as I know Slack runs on AWS and they do not love Microsoft at all because of Microsoft Teams. Salesforce runs on Microsoft's Azure. I already see future battles between AWS and Azure people. Lots of people are going to quit.

  2. Avatar

    nbplopes

    I think this makes sense. Slack is a very well made tool for its purpose. Since ever it integrates text messages and chat as well as video. The way its done its smart, the entire chat streams becomes a kind of a knowledge base. Internally we use this in our company. We don’t exchange emails.


    MS Teams well, it started by being a kind of a Slack ripoff (renaming things, but mostly based on the same concepts). The aim of Teams seam to be the same in the end. Replacing email has an internal communication medium. It doesn’t do that much either without the integration with other Office tools.


    Personally if a company productivity tool strategy is towards Office, MS may be a better bet for the purpose. On the other hand, if the strategy is keep multiple suppliers in the loop in order not to get locked in .... other alternatives may be better.


    EDIT. They share also something in common. Sales Force had a similar encounter with MS, just like Slack, some time ago. I think diversity is great, it provides better products. Slack simply did not have the financial resources of MS aggressive tactics to win in this area. Now with the experience of Sales Force as well as financial ability, ... it will be interesting. Now Google will enter this game too, I’m surprised it was not Google making this move.


    PS: On Google Isn’t Google kind of quite this year? I mean, look at Amazon, Apple, MS ... heck even Sony this year.


    • Avatar

      wright_is

      In reply to nbplopes:

      How is it with archiving? It is a legal requirement in Germany, for example, that all messaging systems in a company store all messages for 10 years in unalterable form - i.e. the user cannot go back and change the contents of a posted message or delete it?

      That makes email difficult, you need to add an archiving tool to most email systems, I think Exchange only became partially compliant with the law in 2012 (a legal requirement for at least 15 years before that).

  3. Avatar

    waethorn

    Two overpriced things I don't use in my business combined, meaning one less thing I have to hear about on tech blogs.

  4. Avatar

    scovious

    Being integrated into a big company means Slack can't excuse their slow iteration on a small staff or not enough money. This will be good for the growth and stability of both Slack and Teams.

  5. Avatar

    rm

    Something tells me that Slack will only be considered by companies with Salesforce products now. I also see the price of Slack increasing as well. Not sure I like the fit. Amazon would have been able to keep the price down and not make it an enterprise product (or at least perceived to be an enterprise product).

  6. Avatar

    helix2301

    I am kind of surprised I thought for sure Oracle would have purchased them with the way they bundle slack with their cloud offerings maybe they spent to much on TicTok

  7. Avatar

    crunchyfrog

    SalesForce stock has tanked since this was announced. Stakeholders must not be happy.

    • Avatar

      Chris_Kez

      In reply to crunchyfrog:

      When news of an acquisition hits, the acquiring company typically sees their stock dip, while the company being acquired gets a stock bump; this is normal. The acquiring company has to pay a premium for the target company; this makes the deal attractive to shareholders of the target company, otherwise why agree to the deal? (Unless you're talking about a hostile take-over, which is unusual). Now, if Salesforce stock stays down for several weeks after this, absent some other bad news, then it might be safer to conclude that the market is not happy about the deal.

  8. Avatar

    eugberan

    So, salesforce is paying top dollar for old technology? Time to get that Xbox 360 out of storage and clean it up!

  9. Avatar

    Chris_Kez

    I’m no Slack apologist but I’m confused by the comment that they’ve lost 40% of their value. They IPO’d at a valuation of $19.5B and $38 per share. They’ve now sold for $27B at $27 per share.

  10. Avatar

    jchampeau

    That line in A Few Good Men about being "galactically stupid" comes to mind. And in a couple years, someone at Salesforce HQ will be using another line from that same move: "Give me the truth about the Slack acquisition. You want the truth? YOU CAN'T HANDLE THE TRUTH!"

  11. Avatar

    codymesh

    We should all want Salesforce to succeed in creating this "operating system for the new way to work", but I think the result will just be the death of Slack. I don't know about this, man.


    Also this type of product can absolutely be the result of industry collaboration instead of corporate consolidation, but until regulators wake up, every cool start-up will be gobbled up by a larger corp.

  12. Avatar

    Daekar

    I have been using Slack for a text RPG game with some friends, and I really don't get why the industry thought it was all that and a bag of chips. It's a channel based chat client with a few plug-ins... There isn't anything new or original about it, it's the same kind of thing that I have been doing since the 90s.

  13. Avatar

    pherbie

    That number is mind numbingly stupid. On Annual revenue of about $US15Billion that's two years of revenue. Not profit, revenue!

    It's also about $US3 for every man woman and child on this planet!!!

    How would this ever make sense?

    • Avatar

      nine54

      In reply to PHerbie:


      It does seem kinda crazy that Slack would go for ~$30B when ARM, arguably a much more important and valuable company, sold for only ~$10B more.


      There likely were a few suitors in the mix, driving up the price and adding a defensive angle to the sale. And I'm sure Slack leadership played up the passionate nature of its user base. But yeah, overall, whichever bank led the charge here for Slack definitely earned its keep lol.

  14. Avatar

    matsan

    As a non-Salesforce customer, this sentence in the PR: "Combining Slack with Salesforce Customer 360 will be transformative for customers and the industry." is not fun to read. I guess it will be "transformative" for us to move away from slack.

    If nothing else I see a big win for Teams - congratulations!

  15. Avatar

    spiderman2

    Let's see if Slack CEO will cry out loud as he did for MS Teams

  16. Avatar

    SRLRacing

    I am no expert but that's at least a couple dollars too much to pay for a private Discord channel.

  17. Avatar

    anoldamigauser

    I used to travel through Penn Station where Slack would often have ads all over touting how collaboration was enabling teams to get more done, but in all of those ads, they never seemed to be doing any work...just sending emojis congratulating themselves and planning where to meet after work.

    Perhaps more effective advertising would have helped their cause.

  18. Avatar

    jolla

    Slack is like Outlook email, can't really do anything with it except send messages and attach files. If they add more functions such as being able to do windowed screenshot, can annotate the screenshots, do video calls, or share screen in real time such as Zoom or Wechat, it could be useful.

    • Avatar

      nbplopes

      In reply to jolla:


      you can video calls, share screen and all that.


      so I guess you may not know what slack is


      but yes, I think MS teams surpassed slack in many ways in terms of features. Unfortunately did not find teams realiable ... maybe the situation has changed from 8 months ago. Just had a video chat on teams with a client and it went swell ... fast, smooth, greats video quality. Kind of surprised really.

    • Avatar

      spiderman2

      In reply to jolla:

      Zoom and Wechat are not the only ones, also Skype and Teams can do that

  19. Avatar

    canamrotax

    Good thing I wasn't drinking coffee when I saw this, otherwise it would have come out my nose.

  20. Avatar

    MarkPow

    Sounds like the C-Suite over at Salesforce have more money than sense.

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