Salesforce, the CRM powerhouse that lately exceeded $20 billion in annual revenue, declared today it is venturing into enterprise social by buying Slack in a $27.7 billion megadeal. Rumours of an outstanding deal surfaced last week, causing Slack’s stock price to rise.
Salesforce co-founder and CEO Marc Benioff didn’t mince words on his latest acquisition. It is a match made in heaven for him. Salesforce and Slack will collaborate to shape the future of enterprise software and modify the way everyone operates in the all-digital, work-from-anywhere world.
Slack CEO Stewart Butterfield was no less unrestrained than his future boss. Every employee at every organization has to interact, something that Slack can ably empower. It also helps external communication with customers and partners, something that should be quite handy for an organization like Salesforce and its family of offerings.
In 2020, Slack had lost around 40% of its value after going public. Even After its latest earnings report, the company lost 16% of its value, and before the Salesforce deal leaked, the company was valued only a few dollars each shares more than its direct listing reference price. Toss in net losses of $147.6 million during the two quarters ending July 31, 2020, Slack’s dreary public valuation and its winding path to revenue generation was a soft target for a takeover like this one. The only surprise here is the value.
Slack’s present valuation, according to both Yahoo and Google Finance, is little above $25 billion, which, implies that the market priced the company somewhat accurately. Slack is up around 48% from its estimate that preceded the deal becoming known.
The fresh agreement also puts Salesforce more on par, and in competition, with its arch-rival and sometime friend Microsoft, whose team’s products have been directly challenging Slack in the market. Microsoft, which passed on acquiring Slack in the past for a fraction of what Salesforce is paying today, has made Teams a key priority in recent quarters, reluctant to grant any portion of the enterprise software market to another organization. What really has set Slack apart from the pack, was its ability to be integrated with other enterprise software. When you blend that with bots, those intelligent digital helpers, the company could offer Salesforce customers with a central place to work without changing focus because everything they have to do can be done in Slack.