Salesforce to buy Slack in $27.7b software megadeal
"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," Salesforce chief executive Marc Benioff said in a release.
Slack co-founder and chief executive Stewart Butterfield said: "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."
The deal is expected to close next year pending shareholder and regulatory approval.
- Battling a 'behemoth' -
A core reason for the acquisition is to keep pace with "cloud behemoth" Microsoft and its popular productivity tools including Office 365 and Teams online collaboration service, according to Wedbush Securities analyst Dan Ives.
Microsoft offerings that were already widely used by businesses have gained even more popularity due to a remote work trend accelerated by the pandemic, Ives said.
Salesforce may need a company such as Zoom to create a suite of applications to compete with Office 365 and Teams, he said.
It is likely to be difficult to lure businesses away from Microsoft tools they are accustomed to using, but Slack has the advantage of being seen as easy to use, according to Moorhead.
"I don’t see Microsoft customers leaving Teams and replacing it with Slack post-acquisition or it would have already happened when Microsoft was more vulnerable," the analyst said.
- One Percent Pledge -
During a quarterly earnings call late Tuesday, Benioff touted the Slack acquisition as "a marriage made in heaven." He said that the companies were so near one another in downtown San Francisco that the chief executives could wave at one another from their office windows.
Benioff added that when Slack co-founders approached him about a merger his "eyes lit up."
"We're giving each other big hugs when the pandemic is over," Benioff said.
Slack combines data and online tools to enable workers to collaborate from anywhere.
The acquisition "represents a major shot across the bow against Microsoft," Ives said.
"Even once a vaccine is deployed to the masses and employees start to return to the office during the course of 2021, collaboration/messaging software will become further embedded in enterprise initiatives looking forward," Ives said.
Salesforce beat expectations with a record-setting financial quarter that ended on October 31 with a net income of $1.1 billion on revenue of $5.4 billion.
While building Salesforce, Benioff has advocated that "the business of business is improving the state of the world."
He invites businesses to take a "One Percent Pledge" promising to commit a percent of their product, time, and resources to philanthropy.
Benioff and his wife, Lynne, bought Time magazine for $190 million two years ago.