Confirmed: Salesforce to buy Slack for $27.7bn in its largest ever acquisition

2 Dec 2020

Image: © Sundry Photography/Stock.adobe.com

Salesforce plans to integrate Slack into its CRM platform to build a unified service for the all-digital workforce.

Following recent rumours, it was announced on Tuesday (1 December) that Salesforce will acquire work communications software company Slack.

At $27.7bn, the deal is Salesforce’s largest acquisition to date. It is expected to close midway through next year, at which point Slack will become an operating unit of Salesforce that will be led by Slack CEO Stewart Butterfield.

Both companies’ board of directors have approved the deal. Slack stockholders are expected to do the same and adopt the merger agreement.

‘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’
– MARC BENIOFF

The aim of the acquisition, according to the statement from Salesforce, is to combine Salesforce’s CRM platform with Slack’s communications tools to create a unified service tailored to digital-led teams around the world. Salesforce has dubbed this “the operating system for the new way to work”, leaning into the workplace transformation brought on by the shift to remote, distributed workforces during the 2020 pandemic.

Functionally, this will involve deep integration of Slack into Salesforce Cloud, with Slack becoming the new interface for Salesforce Customer 360.

“Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it,” said Salesforce CEO and chair Marc Benioff.

“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.”

‘The most strategic combination in the history of software’

Slack’s current client base spans scaling start-ups to established Fortune 500 brands, as well as academic institutions, non-profits and governments in more than 150 countries. What started as a chat app designed to shift workplaces away from email-led internal communications has grown to integrate tools such as video calls, file hosting and more.

Slack also integrates with thousands of apps, allowing clients to pick and choose services to suit their collaboration and productivity needs. This is set to continue following the acquisition as the combined companies aim to build an extensive open ecosystem of apps and workflows for enterprise.

Of the acquisition, Butterfield said: “Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

As of October last year, Slack reported more than 12m daily active users, though this figure has likely grown throughout 2020. However, the company’s earnings this year have disappointed as it failed to catch the remote working wave at the level surfed by companies such as Zoom.

Slack is currently locked in fierce competition with Microsoft, and in July the company filed an EU antitrust case over its rival messaging product, Teams. Slack accused Microsoft of being engaged in an “illegal and anti-competitive practice” by bundling Teams with its Office 365 enterprise suite in a way that is designed to eliminate rivals.

Meanwhile, Salesforce reported strong third-quarter results alongside the acquisition announcement. Revenue at the company increased 20pc year-on-year to $5.4bn and it has raised its full-year guidance to $21.11bn, forecasting a 23pc increase on the previous year.

“We’re rapidly moving to an all-digital world, where work happens wherever people are,” said Benioff. “Our results are being driven by the success of our customers and the relevance of our Customer 360 Platform in this new normal.”

Elaine Burke is the editor of Silicon Republic

editorial@siliconrepublic.com