San Francisco-based Salesforce is reportedly in advanced negotiations to acquire workplace messaging app Slack, in the latest of a flurry of year-end mergers and acquisitions.

Slack Technologies, which launched a decade ago as a gaming company called Tiny Speck and soon pivoted to focus on its channel-based chat software, had a market valuation of just under $17 billion on Tuesday, as the Wall Street Journal reports. Salesforce is likely to pay somewhere north of that to buy the company, positioning Salesforce to rival Microsoft as an all-purpose software provider — with the acquisition of the biggest rival to Microsoft's Teams software.

Slack's stock price soared over 30% in Wednesday morning trading after the Journal broke the story, and it's now at $40.70 — up from $29.55 at the morning bell.

At potentially around $20 billion, this deal would be Salesforce's biggest acquisition to date, as the SF Business Times notes.

Calling the potential deal an "aggressive move" for Salesforce and CEO Marc Benioff to expand the company's offerings, Wedbush Securities analyst Dan Ives tells the Business Times, "This deal would be a major shot across the bow at Microsoft with the company's Teams offering a direct messaging competitor against Slack that has been a clear hurdle to growth and now would be a two-horse race between Microsoft and Salesforce."

As the Journal notes, Slack's stock price has not dramatically changed since its initial direct listing price of $26 in June 2019, opening the door for an acquisition like this one. And Slack has been struggling to capture market share from Microsoft, though the work-from-home trend during the pandemic has sent Slack downloads much higher than in recent years.

Salesforce previously acquired Tableau Software in 2019 for over $15 billion, and cloud-software provider Vlocity Inc. earlier this year. Salesforce had notably been in talks to acquire Twitter in 2016, a deal which Benioff ultimately walked away from because investors reportedly balked at the idea and the potential complications involved with owning the social media company.

Photo: Pankaj Patel