Salesforce Acquires Slack For $28 Billion For Workforce Collaboration

Image credit: Slack

As the enterprise world adjusts to remote working, Salesforce pay $27.7 billion to acquire Slack for enhanced workplace collaboration

Workplace communication and collaboration specialist Slack Technologies is to be acquired by CRM powerhouse Salesforce, in a deal worth $27.7 billion.

Salesforce announced that it was acquiring “the most innovative enterprise communications platform” in order to “create the operating system for the new way to work, uniquely enabling companies to grow and succeed in the all-digital world.”

Slack was founded way back in 2009, and its rapid growth over the years has not gone unnoticed in Silicon Valley. Indeed, the firm was reportedly a $9 billion acquisition target for Amazon back in 2017.

Marc Benioff of Salesforce. Image credit: Salesforce

Salesforce acquisition

Google, Microsoft, Facebook all launched competitive rival offerings, with Microsoft Teams perhaps being one of the most notable, alongside Facebook at  Work, Yammer and others.

Under the terms of the deal, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing approximately $27.7 billion based on the closing price of Salesforce’s common stock on 30 November.

It should be noted that Salesforce and Slack in 2016 had agreed to integrate features from each other’s services.

“Combining Slack with Salesforce Customer 360 will be transformative for customers and the industry,” Salesforce announced. “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.”

“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, chair and CEO, Salesforce.

“This is a match made in heaven,” he added. “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.”

“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,” added Stewart Butterfield, Slack CEO and Co-Founder.

“The opportunity we see together is massive,” Butterfield said. “As software plays a more and more critical role in the performance of every organisation, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organisational agility. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

Enterprise communication

The thinking is that Slack will be deeply integrated into every Salesforce Cloud.

“As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences,” said the firm.

It should be noted that the board of directors of each of Salesforce and Slack have approved the transaction and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement.

The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022, subject to the usual approvals.

When it listed its shares publicly in 2019, Slack was valued at roughly $20bn.

However, its shares sank after the launch and it has struggled against the might of Microsoft Teams.

Collaboration validation

Slack rival Element, which offers a secure collaboration platform used by the French Government and German Defence Forces, noted the deal represents a validation of collaboration tools.

“Salesforce’s acquisition of Slack is an interesting move for the company and validates the continued demand for collaboration tools in the market,” said Matthew Hodgson, CEO of Element.

“The move fuels the rivalry between Microsoft and Slack, which escalated recently when Slack filed an antitrust complaint against the former for unfairly leveraging Office to promote Microsoft Teams,” said Hodgson. “If Slack are to successfully compete, they need to join an open ecosystem for collaboration.”

“Thankfully, Salesforce is pragmatic when it comes to integrating with third-parties, given the broad range of systems it integrates with,” added Hodgson. “Hopefully, Salesforce will help Slack understand the importance of interoperability with other messaging platforms to foster competition and empower users to choose their preferred chat service, rather than being locked-in to a single vendor.”