Salesforce Picks up the Slack

A Closer Look at Salesforce’s Intent to Acquire Slack for $27.7B

Global CRM titan Salesforce (NYSE:CRM) recently announced its intent to acquire Slack (NYSE:WORK) for a whopping $27.7B in cash and stock. This mega-deal further solidifies the growing need for technology to support a remote working environment throughout the COVID-19 pandemic.

Slack offers a leading cloud-based communications and collaboration offering for businesses of all sizes. This product category realized a significant uptick in stock price performance, reaching 78.3% YTD by November 30th. Yet, Slack itself has not been able to sustain the rise like many other COVID stocks have. Due to increased demand for it’s product, Slack stock initially spiked 134.2% from the trough of $17.04 in March to $39.9 in June. Yet, it has maintained a steady decline until just recently, after suffering from weak billings and intense competition. The company constantly grappled with the ever-popular Microsoft Teams application, which announced 155M daily active users in October. However, according to TechCrunch, rumors of a pending deal caused the stock to spike in the end of November. The stock rose from $29.58 per share on 11/24/20 to $42.88 on 11/30/20.

The company ranks in the top 30th percentile of the SEG SaaS Index, reaching a stock price increase of 90.7% YTD as of November 30th. Other communications and collaborations companies realizing the benefits of COVID work from home mandates include Zoom (NASDAQ: ZM), up 603.1%;  Docusign (DOCU), up 207.4%; and Twilio (TWLO), up 22.5%.

What’s Ahead

Slack will be combined with Salesforce Customer 360 to offer a “one stop shop” for enterprise business, where customers can work seamlessly with fewer distractions on a unified platform. “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,” says Marc Benioff, Chairman and CEO of Salesforce. Slack will become the new interface for Salesforce Customer 360, enabling more connected customer experiences. Salesforce and Slack intend to create the most extensive open ecosystem of apps and workflows for businesses. Further, the transaction follows Salesforce’s acquisitive streak, representing the 11th transaction since January 2019. This is Salesforce’s largest transaction to date.

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.

Read the press release for more information: Salesforce to Acquire Slack.

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