the leading software that recently surpassed $20 billion in annual revenue, is moving deeper into acquiring Slack in a megadeal worth $27.7 billion. Rumors of a deal between the two companies surfaced last week, sending Slack’s stock price soaring. The deal is valued at 24 times the company’s estimated 2021 revenue.
Salesforce co-founder and CEO Marc Benioff said that Salesforce together with Slack will shape the future of enterprise software and transform the way everyone works in the digital workplace.
Additionally, Slack CEO Stewart Butterfield said that as software plays an increasingly important role in the performance of every organization, the company shares a vision for reduced complexity, increased power and agility, and ultimately a greater degree of alignment and organizational agility. He did not hide his excitement about the megadeal.
The company had lost about 40% of its value since the start of 2020. Before its deal with Salesforce was leaked, it was worth just a few dollars per share more than its IPO price. Slack’s current valuation, according to Yahoo and Google Finance, is more than $25 billion, meaning the acquisition has had a positive impact on the company’s stock. Slack has risen about 48% since the Salesforce deal was announced.
By acquiring Slack, a service with over 130,000 paying customers, Salesforce is strengthening its enterprise applications portfolio while expanding into new areas of growth. Salesforce also believes that this acquisition help Slack move to the next stage of its own revenue growth, as it moves from the $1 billion stage to the $2 billion stage, a particularly “critical” moment, according to the company. With this acquisition, Salesforce acquires a very powerful “weapon” in its competition with Microsoft.
Today's deal comes after Salesforce bought Quip in 2016 for $750 million. It's worth noting that Salesforce also showed interest in Twitter, the same year Microsoft showed interest in Slack, but ultimately backed out of that deal because shareholders didn't want to deal with the controversial side of the social platform.
Slack was founded in 2013, but it originated from an online multiplayer game company called “Glitch” that was founded in 2009. While the game was ultimately a failure, the startup company developed an internal system in the process of creating that company that later evolved into Slack.
It's worth noting that Slack has always faced competition from various tech giants such as Microsoft, Cisco, Facebook, Google, Asana, and Monday.com.
