Salesforce.com Inc on Tuesday announced a US$27.7 billion deal to buy online collaboration firm Slack Technologies Inc, giving the business software giant a broader array of tools as the COVID-19 pandemic fuels a remote work trend.
San Francisco-based Salesforce would mesh Slack’s messaging technology with its platform for managing marketing and sales teams.
“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,” Salesforce chief executive Marc Benioff said in a release.
Photo: AFP
The deal gives Salesforce the popular workplace messaging software developed by Slack, which has during the pandemic faced increased challenges from video-based services such as Zoom Video Communications Inc.
Slack cofounder and chief executive Stewart Butterfield said: “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.”
The deal is expected to close next year pending shareholder and regulatory approval.
A core reason for the acquisition is to keep pace with cloud behemoth Microsoft Corp and its popular productivity tools, including Office 365 and Teams online collaboration service, said Dan Ives, an analyst at Wedbush Securities Inc.
Microsoft offerings that were already widely used by businesses have gained even more popularity due to a remote work trend accelerated by the pandemic, Ives said.
Salesforce shares slid more than 4 percent in after-market trade on the acquisition news, while Slack shares slipped less than 1 percent.
During a quarterly earnings call late on Tuesday, Benioff touted the Slack acquisition as “a marriage made in heaven.”
He said that the companies were so near one another in downtown San Francisco that the chief executives could wave at one another from their office windows.
When Slack cofounders approached him about a merger his “eyes lit up,” Benioff said.
“We’re giving each other big hugs when the pandemic is over,” Benioff added.
After the deal closes, Slack would become an operating unit of Salesforce and continue to be led by Butterfield.
Salesforce has become the top “customer relationship management” platform since it was launched by Benioff in 1999, pioneering a shift to offering software as services in the internet cloud.
Slack combines data and online tools to enable workers to collaborate from anywhere.
The acquisition “represents a major shot across the bow against Microsoft,” Ives said.
“Even once a vaccine is deployed to the masses and employees start to return to the office during the course of 2021, collaboration and messaging software will become further embedded in enterprise initiatives looking forward,” Ives said.
Salesforce beat expectations with a record-setting financial quarter that ended on Oct. 31 with a net income of US$1.1 billion on revenue of US$5.4 billion.
While building Salesforce, Benioff has advocated that “the business of business is improving the state of the world.”
He invites businesses to take a pledge promising to commit 1 percent of their product, time and resources to philanthropy.
Benioff and his wife two years ago bought Time magazine for US$190 million.
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