Salesforce in talks to buy Slack in massive cloud software deal

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Cloud-based software company Salesforce is in talks to buy Slack, the business messaging app, in what would be one of the biggest software deals to date, according to people familiar with the matter.

An announcement could be made early next week, a person familiar with the deal said.

Marc Benioff, the founder and CEO of Salesforce, has been looking for acquisitions for some time and is looking at several goals, according to another person knowledgeable on the matter.

Slack shares rose 22% after the Wall Street Journal first reported the two companies discussed a deal, which pushed the company’s market value to over $ 20 billion of dollars. Salesforce’s stock fell about 3 percent on the news.

Salesforce has been among the big winners from the coronavirus pandemic due to a surge in spending on cloud software. In contrast, Slack – an app used by workers both to collaborate and access other cloud apps – failed to catch this year’s ‘work from home’ wave, leaving its actions lagging behind. of its rivals in the cloud software industry on fire.

An acquisition would bolster Benioff’s efforts to challenge Microsoft to become the leading provider of cloud software for office workers, making Slack a ‘front-end’ for Salesforce users to leverage the company’s applications. company, including its main customer relationship management department.

Microsoft Teams – built as a rival to Slack – has become a window to the software group’s other apps, including its CRM software, potentially giving it a way to outperform Salesforce.

Salesforce shares have more than doubled since the pandemic hit the United States in early March, sending many office workers to work from home and prompting businesses to digitize their operations.

Shares of Slack, which arrived on Wall Street via a direct listing last year, have fallen behind after two quarters of disappointing results. Before talks with Salesforce were announced, they were trading 23% below their closing price on the first day of trading last year, despite rising 78% in the cloud software industry this year.

Stewart Butterfield, co-founder and CEO of Slack, will have a say in the outcome of the discussions. As part of a special class of watchdog shares, he personally controls around 42 percent of the votes in Slack, through his own stake in the company and voting agreements with other investors.

Salesforce has been a big buyer in recent years. It acquired Tableau Software, which makes data analysis software, for around $ 16 billion in 2019 and a year earlier the company took over network software maker Mulesoft for $ 6.5 billion.

However, in August of this year, Benioff said the high valuations of software companies made it difficult for companies to close deals. “For a company like Salesforce, we don’t really see a M&A environment,” he said on a call with analysts.

A considerable portion of Slack’s bid will likely be in stock as Mr Benioff would like to use Salesforce’s own rich market valuation as the currency to close the deal, according to a person briefed on the matter.

Additional reporting by Miles Kruppa in San Francisco

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