Late Tuesday, news surfaced that mega CRM business Salesforce just purchased top SMB chat service Slack for $27.7 billion in a deal for the acquisition record books.
Late last week, Slack’s stock evaluation rose more than 25% on rumors of a pending deal with Salesforce. With a deal exceeding the previous industry’s landmark price tag of $26.6 billion paid by Microsoft for LinkedIn, both Slack CEO Stewart Butterfield and Salesforce co-founder Marc Benioff were rightly bullish in their post acquisitions statements today.
Benioff, pulling no punches with rather ambitious rhetoric, believing this purchase will reshape the entirety of digital workspaces.
“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.”
Butterfield aimed his remarks at a more leveled audience, perhaps, interested in why the seemingly burgeoning enterprise communication platform partnered relatively early in its business trajectory.
“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.”
While publically bullish about a $27B payday, today’s acquisition couldn’t have come at a better time for Slack and Butterfield as competition over the past five years has squeezed roughly 40% of its stock value out of the company’s portfolio. Prior to last week’s rumors, Slack was trading at a fraction of its former shares hay day following a rough couple of earnings reports. Slack was also mounting losses and struggling to find ways into more lucrative contracts as it seeded ground to Microsoft Teams, all of which presented Salesforce the opportunity to step in and help fund a resurgent competitive attempt for Butterfield and crew.
As for the Salesforce side of this deal, the new Slack acquisition allows the SaaS company to provide a more socially connected platform for its customers to engage with as the face of the service. Salesforce already crafted an internal solution in Chatter that was supposed to be its own version of Slack, but the platform hasn’t taken off quite to the company’s expectations. Salesforce has been actively and publically looking for a component piece like Slack for some time dating back to its 2016 consideration of Twitter or its infamous loss to Microsoft for LinkedIn.
It would seem that the money Salesforce set aside for the lofty LinkedIn acquisition was now put toward the Slack purchase, which is still a bit of a headscratcher for some as Slack and its future appeared to be valued much lower by the industry.
It should also be noted that Slack is currently in court trying to present an antitrust case against Microsoft for what it deems as anti-competitive behavior in how the company is leveraging Microsoft Office to expand Teams use. It’ll be interesting to see how and where these claims now land in light of this new Salesforce mega-deal.