© Bloomberg Slack Technologies Inc. signage is displayed on a smartphone in an arranged photograph taken in Arlington, Virginia, U.S., on Tuesday, Sept. 8, 2020. Slack Technologies rose as much as 5.2% for its best intraday gain since August 26 ahead of second-quarter results expected postmarket Tuesday.
(Bloomberg) -- Salesforce.com Inc. is considering acquiring workplace chat tool Slack Technologies Inc., according to a person familiar with the matter.
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Slack shares surged as much as 34% while the news weighed on Salesforce, which fell as much as 5%.
Since Salesforce and Slack coming together, Slack has been able to sell through Salesforce executives and their channel accounts, besides their own sales ave. Salesforce is good at mega-acquisitions. Salesforce paid $6B for Mulesoft, $15B for Tableau, $3B for ExactTarget and these are Salesforce’s big M&A winners. They know how to take an established brand and grow it faster, and build or expand a new core offering around it. Slack has already become very enterprise. The majority of Slack’s. Salesforce to acquire Slack for nearly $28 billion. With the cash and stock deal, the messaging platform will be 'deeply integrated into every Salesforce Cloud,' the companies say.
The companies have been holding talks and could announce a deal as soon as next week, the person said. A deal hasn’t been finalized and could still fall apart, the person said, asking not to be named because the matter is private.
Representatives for Salesforce and Slack couldn’t immediately be reached for comment.
The Wall Street Journal first reported on the discussions.
Acquiring Slack, which has a market valuation of almost $22 billion following reports of the talks, would be Salesforce’s biggest deal ever, according to data compiled by Bloomberg. The San Francisco-based company, led by Marc Benioff, last year acquired Tableau Software Inc. in an all-stock deal valued at $15.3 billion.
“Smart move by Benioff,” especially if he uses stock, said Anurag Rana, an analyst at Bloomberg Intelligence. “It helps both Salesforce.com and Slack compete more aggressively with Microsoft.”
Slack soared to an intraday high of $39.73. The stock has fluctuated this year as the pandemic’s effect on businesses has spread to its customer base. Shares plummeted 19% in September after the company’s quarterly billings fell short of analysts’ estimates, as its small- and mid-sized business customers cut spending budgets. The San Francisco-based company went public via a direct listing in 2019.
Salesforce, which makes the U.S.’s dominant sales-tracking software, slid as much as 5.4%. It has climbed about 60% this year for a market valuation of $227 billion.
Kirk Materne, an analyst at Evercore ISI, said that Salesforce’s shares were down because this was “not the right target, nor the right time.”
“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 wrote in a note Wednesday.
Salesforce is hosting its annual Dreamforce conference next week, which will be virtual because of coronavirus restrictions. The event for customers, partners and employees will be a showcase for the software maker’s future products and strategy roadmap. Dreamforce is the largest software conference in the world and Benioff will give his highly anticipated keynote address on Wednesday.
(Updates with analyst quote in the 11th paragraph)
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Enterprise software giant Salesforce.com (CRM) reported stronger-than-expected third-quarter earnings results on Tuesday and announced that it has signed a definitive agreement to acquire popular messaging software platform Slack Technologies (WORK).
Salesforce will acquire Slack for $27.7 billion ($26.79 in cash and 0.0776 shares), making it the largest ever acquisition for the cloud software giant.
© Provided by Yahoo! Finance Salesforce.com CEO Marc Benioff delivers his keynote address at the company's annual Dreamforce event in San Francisco, California November 19, 2013. REUTERS/Robert Galbraith (UNITED STATES - Tags: SCIENCE TECHNOLOGY BUSINESS) Salesforce said the deal will be “transformative for customers and the industry” and it will “create the operating system for the new way to work, uniquely enabling companies to grow and succeed in the all-digital world.”
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“[Slack CEO] Stewart [Butterfield] and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it,” Salesforce CEO Marc Benioff said in the release.
“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. I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes,” Benioff added.
Salesforce said Slack will become the new interface for Salesforce Customer 360 and it will be “deeply integrated into every Salesforce Cloud.”
Salesforce To Acquire Slack For $27.7 Billion
According to Salesforce, 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 are more productive, make smarter, faster decisions and create connected customer experiences.”
Slack also plans to expand its footprint through Salesforce, including its customers and other companies going through a digital transformation.
Salesforce Acquiring Slacks
Slack will continue to be led by Butterfield.
Salesforce Bought Slack
[Read more: Why Salesforce buying Slack for $27.7 billion isn't a shock]
Record Q3 results
For the third quarter, Salesforce reported revenue of $5.42 billion, up 20% year-over-year, beating analysts’ forecasts of $5.25 billion. The SaaS giant reported earnings per share of $1.74, topping forecasts for 75 cents. This is the second consecutive quarter of revenue above $5 billion.
Benioff started Salesforce in 1999, and since that time it’s become one of the fastest-growing enterprise software companies in the world with a market cap greater than $219 billion. By 2018, Salesforce was doing $10 billion-plus in annual revenues.
Salesforce raised its fiscal 2021 revenue guidance to $21.11 billion. It initiated its fiscal 2022 guidance, forecasting it to be between $25.45 billion and $25.55 billion, up 21% year over year, with approximately $600 million related to the Slack acquisition.
“No other major enterprise software company is growing at this rate. We’re rapidly moving to an all-digital world, where work happens wherever people are. Our results are being driven by the success of our customers and the relevance of our Customer 360 Platform in this new normal,” Benioff said in the earnings release.
The Slack deal is the latest in a slew of big acquisitions for Salesforce. In June 2019, Salesforce acquired Tableau Software, an analytics and data visualization company, in an all-stock deal for $15.7 billion. A year before that deal, Salesforce acquired Mulesoft, a company that creates application programming interfaces (APIs) to connect different systems, for $6.5 billion.
Other deals include Salesforce’s acquisition of ExactTarget in 2013 and its 2016 acquisition of cloud-based e-commerce services provider Demandware.
Salesforce has looked at other big acquisitions in recent years that didn’t transpire. In 2016, Microsoft edged out Salesforce to acquire LinkedIn in a $26.2 billion deal. That year, Salesforce also considered acquiring Twitter. In his book “Trailblazer,” Benioff wrote that in 2016 he was convinced Salesforce should make a bid for Twitter on the view that the social platform could offer the company’s customers a “treasure trove of data.”
Slack went public via a direct listing in June 2019. Shares of Slack have leaped nearly 48% in the last five days.
Salesforce’s shares fell 3.36% to last trade near $233.83 in the after-hours session. Shares of Salesforce have surged more nearly 50% year-to-date, outpacing the broader market.
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.
Salesforce Acquisition Of Slack
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