Salesforce is snapping up Slack for $27.7 billion in cash and stock, in a move that will mark its largest acquisition to date, the companies said Tuesday.
Under the deal, Slack will be combined with Salesforce Customer 360 and serve as the new interface for the service. Slack's co-founder and CEO Stewart Butterfield will continue in that role when Slack becomes an operating unit of Salesforce.
The deal is expected to close by the end of July, pending regulatory and shareholder approval.
"Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it," Marc Benioff, CEO and chairman of Salesforce, said in a 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-home-anywhere world."
With Covid-19 forcing companies across the globe to operate with remote workforces, Salesforce felt compelled to find a way for its customers to seamlessly connect to their clients, employees and partners and the apps that they use on a daily basis using their existing workflows, regardless of their location,
Slack will be integrated within every Salesforce Cloud and allow users to communicate and collaborate, as well as take action on customer information, across Salesforce.
"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," Butterfield said in a statement. "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."
The deal, which has been anticipated since last week, gives Salesforce a high-profile workplace communications and collaboration service that is expected to yield better adoption rates than its homegrown Chatter service, according to analysts.
It will also bring Salesforce another revenue stream to feed its 20%-plus year-over-year revenue growth — a move that gets harder for Fortune 500 companies to maintain as they get larger.
The catalyst for Salesforce’s revenue growth — now and in the future — is its shift from the cloud-based customer management relationship (CRM) software that is increasingly becoming a commodity to a company with a broader focus that offers more functionality within CRM or content integration, analysts said. By helping its customers transition to the cloud, digitize their operations and provide ways to integrate users’ sales, service, marketing, commerce, communities and other channels as part of its Customer 360 platform, Salesforce can keep its revenues growing, analysts have said.
In addition to its pending Slack acquisition, Salesforce made two other huge non-CRM acquisitions in the past two years - MuleSoft for $6.5 billion in 2018 and Tableau for $15.7 billion last year.
Based on Salesforce’s revenue growth, analysts predict Salesforce could handle a large acquisition like a MuleSoft or Tableau once every 12 to 18 months, with a lot of little tuck-in acquisitions in between. Slack apparently is keeping the cloud computing titan on track for that schedule
For Slack, the Salesforce acquisition is also expected to yield leverage in its fight against Microsoft Teams.
Slack, which offers a free and premium version of its workplace collaboration messaging service, has faced an uphill battle beating back Microsoft’s rival Teams offering.
The Redmond giant bundles Teams into its Microsoft 365 offering and, as a result, users get Teams for free as part of their 365 subscription. Slack earlier this year filed a complaint with the European Commission, citing that Microsoft was unfairly bundling Teams in with its Office suite.
Salesforce could take a similar tactic and bundle Slack into its Customer 360 offering and provide it as a free service, or offer it as a premium service to drive further revenue, or both.
