Salesforce is one of the largest software as a service, or SaaS, companies that specializes in customer relationship management. The company is currently in advanced talks to acquire Slack, a proprietary business communications platform. This acquisition would be one of the biggest software deals in the history of the industry. Any acquisition of Slack would value the company at around $17 billion and would be the biggest acquisition ever for Salesforce.
According to Dan Ives of Wedbush Securities, “This would be a game changer move for Benioff & Co. [referring to Salesforce CEO Marc Benioff] to further build out its collaboration engine and product footprint as cloud spending ramps across the enterprise.” It would be similar in value to Facebook’s purchase of WhatsApp in 2014, Microsoft’s purchase of Facebook in 2016, and IBM’s purchase of Red Hat in 2019, which were purchased for $19 billion, $27 billion, and $34 billion, respectively.
Over the past few years, Salesforce has been on an acquisition splurge, utilizing their market cap in order to purchase companies and take their business to the next level. In 2018, the company acquired MuleSoft for $6.8 billion, their biggest acquisition at the time. The year after this they acquired Tableau, a data visualization company, for $15.3 billion. Now, they are looking at Slack to provide the company with growth through 2021.
When the news of the acquisition was announced, shares of Slack surged almost 34% to an intraday high of $39.73. Salesforce shares, however, fell by almost 5% despite having climbed as much as 60% on the year. Microsoft also experienced a dip in their stock price upon the announcement. This is due to the fact that Microsoft competes with Salesforce with their software for tracking customers and competes with slack through Microsoft Teams.
While many analysts see the acquisition as a beneficial move for Salesforce, there are some that are skeptical. An analyst at Evercore ISI, Kirk Materne, stated that Salesforce’s shares were down because he believes this is not the right time or the right target for their next acquisition. “While there is some strategic rationale for this combination, we expect most investors will view the deal as a ‘reach’ in order to buy some growth” in 2021, Materne stated.
It is currently unclear exactly how much the deal will be worth if executed. Spokespeople for either company were not available to comment on the acquisition. However, Slack believes Salesforce will provide the company with a larger customer base than they currently have. An update on the deal could be announced as soon as this week.
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