After a 40% run in the market, the rumours were proven true – Salesforce confirmed a deal to acquire Slack for a whopping $27.7B.
The deal is nearly twice as large as Salesforce’s previous largest acquisition (of $15B) and brings two of tech’s highest-profile CEOs together to take on the Silicon Valley giants… with a specific aim at Microsoft ($MSFT).
Microsoft Teams, a workplace collaboration software that directly rivals Slack, has seen daily active users grow from 32m to 115m this year alone; by aggressively bundling Teams into other enterprise offerings such as Microsoft Office, MSFT had a massive leg up against Slack this year. The advantage was so extreme that Slack even filed an antitrust suit against Microsoft in Europe about the matter.
David vs Goliath
While Slack may be new to the fight, Salesforce has been in a war with the giant that is Microsoft for years, attempting to topple the leader in tech tools for businesses. Salesforce has also been creating or accumulating workplace collaboration tools for years including an internal corporate social network, a cloud collaboration app, and more, in the hopes that they could beat MSFT to the punch.
Back in 2016, Salesforce tried to acquire the professional social network, LinkedIn, but ended up losing the deal to Microsoft in a $26.2B agreement. Microsoft, on the other hand, has been trying to attack Salesforce on its home front, introducing its Dynamics product to the customer relationship management game. While Dynamics only controls roughly 3% of the market (to Salesforce’s 20%), we’ve seen how fast MSFT can grow a specific product through enterprise package deals.
The rapid shift to remote work brought on by this year’s circumstances have seen the battle heat up as organizations of all sizes transition online whilst trying to maintain full productivity.
The $27.7B price tag lands this deal as the second largest acquisition in the entire software industry, beaten out only by IBM’s purchase of cloud caretaker, Red Hat, for $34B in 2018. Before this deal was announced, Microsoft’s LinkedIn acquisition was second place… perhaps a bit of poetic justice for Salesforce CEO, Marc Benioff?
Regardless of the deal size, the synergies achieved by integrating Slack into Salesforce’s existing ‘Customer 360’ product are expected to be hard-hitting and wide-reaching, helping turn Salesforce into a more robust service for enterprises.
Benioff made an announcement on Tuesday, December 1st regarding the deal, stating that “we see Slack as a once-in-a-generation platform and company... It’s a perfect match for us both.”
Slack CEO, Stewart Butterfield, is expected to join the Salesforce team and continue managing Slack as a unit of the larger company. The anti-Microsoft council grows, and we’re excited to see what happens next.