Salesforce confirms rumoured Slack acquisition on eve of Dreamforce 2020

Salesforce has announced a $27.7bn stock and cash acquisition of Slack ahead of the virtual iteration of its Dreamforce 2020 event

Salesforce has announced the acquisition of Slack, reported on last week, ahead of the virtual iteration of its Dreamforce event.

The CRM supplier said it has agreed to buy Slack Technologies for $27.7bn in stock and cash.

As noted by the Financial Times, the deal is the largest in the cloud software-as-a-service industry, eclipsing Microsoft’s $26.2b splurge on LinkedIn in 2016.

Marc Benioff, chair and CEO of Salesforce, said: “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. I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes.”

For his part, Stewart Butterfield, Slack CEO and co-founder, said: “Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work. The opportunity we see together is massive.

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

Slack will become an operating unit of Salesforce and Stewart Butterfield will continue as CEO.

Combining software

The deal will combine Slack’s instant messaging and related software with Salesforce’s sales and marketing software.

According to a press statement, Slack will be “deeply integrated into every Salesforce Cloud”.

“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,” it said.

The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022.

From a UK perspective, Stephen Kelly, chair of Tech Nation, said: “Salesforce’s acquisition of Slack reflects that, for software companies, the adage ‘grow fast or die slowly’ applies more than ever.

“As organic growth of its CRM market leadership slows, acquisition has been a core engine for revenue growth and innovation,” he said.

“Salesforce has made multiple innovation acquisitions, as well as buying companies with customer bases in adjacent markets. The acquisition of Slack reflects all of these basic drives, and is an increasingly strong offer as the coronavirus pandemic forces workers to adopt new forms of communication and collaboration software, putting this at the heart of daily life for office workers.”

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Salesforce has been growing significantly by acquisition in recent years. In 2019, it acquired data visualisation company Tableau, and in 2018, it acquired applications and data integration supplier Mulesoft.

In a comment previously provided for Computer Weekly, Angela Ashenden, principal analyst for workplace transformation at CCS Insight, said: “In order to maintain the high rate of growth that it has achieved for the past few years, Salesforce has been investing in initiatives that will enable it to expand its footprint in customer organisations. However, the majority of its current applications portfolio doesn’t allow it significant reach beyond the sales and marketing organisation.

“Salesforce has long been eyeing the employee collaboration opportunity – as far back as 2010, when it launched Chatter, later followed by Community Cloud – but neither really provided an extended reach outside sales,” she said. “Its acquisition of Quip in 2016 was another step in this direction, but Quip hasn’t really expanded its reach within customers either.

“Acquiring Slack would be a major boost here, and Slack’s integration and app story would also play well with Salesforce’s strategy,” said Ashenden. “The potential of Slack Connect and creating a B2B collaboration network would also jive well with Salesforce’s business enablement story.”

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