Salesforce grabs Slack in US$27b deal

Published on the 02/12/2020 | Written by Heather Wright


Slack and Salesforce

Is Salesforce + Slack a Microsoft killer?…

Salesforce has snapped up enterprise comms platform Slack, in a US$27.5 billion deal which Salesforce boss Marc Benioff has dubbed ‘a match made in heaven’ and analysts have called a shot across the bow against Microsoft.

Rumours of a potential deal spread last week, with the two companies confirming the acquisition plans earlier today.

The deal will see Slack combined with Salesforce Customer 360 with Slack becoming the new interface for the customer identity management offering and ‘deeply integrated into every Salesforce cloud’.

“This is the most strategic combination in the history of software.”

“As the new interface for Salesforce Customer 360, 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 be more productive, make smarter, faster decisions and create connected customer experiences,” Salesforce says.

Slack will become an operating unit of Salesforce, with Slack co-founder and CEO Stewart Butterfield continuing to head the business.

For Slack, the move will help expand its presence in the enterprise. Despite the enforced work from home moves – and the corresponding rise of Zoom – Slack hasn’t seen a matching jump in its market share. Instead, organisations have reportedly been opting to use Microsoft’s Teams – already installed as part of Office. The Office/Teams bundling been a bugbear for Slack, with the company alleging in a European Commission antitrust case that it’s anticompetitive.

That Microsoft aspect is no doubt a key aspect of the deal, with Salesforce looking to fend off its rival with its ability to connect customers, vendors and partners. Certainly, the companies are pushing the ‘single source of truth’ angle saying the deal will provide a ‘unified platform for connecting employees, customers and partners with each other and the apps they use every day, all within their existing workflows’.

And companies are certainly talking up the deal. Benioff may have claimed a ‘match made in heaven’ but Butterfield took it a step further proclaiming “I believe this is the most strategic combination in the history of software’.

“As software plays a more and more critical role in the performance of every organisation, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organisational agility.”

Daniel Ives, analyst with financial services and investment firm Wedbush Securities, says the move as ‘both an offensive and defensive move for Salesforce in its quest to further penetrate the enterprise cloud shift’ currently dominated by Microsoft.

“If Salesforce wants to expand into enterprise and beyond its core gold mine of sales and marketing departments, this was the moment,” Ives says.

The boards of directors of both Salesforce and Slack have approved the transaction and the Slack board is recommending stockholders approve the deal.

The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022, subject to approval by the Slack stockholders, the receipt of required regulatory approvals and other customary closing conditions.

 

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