Confirming the story that was first reported last week about the two companies being in "advanced" talks about an acquisition, Salesforce and Slack announced Tuesday that they are joining forces.
Salesforce says it is acquiring the decade-old office-chat app company for $27.7 billion — a figure well higher than the $20 billion that was estimated by the Wall Street Journal last week. And this marks Salesforce's largest acquisition to date — and one that positions it to compete directly against Microsoft with a growing suite of business software tools.
According to the announcement, "Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020."
In a statement, Salesforce CEO Marc Benioff said of Slack co-founder and CEO Stewart Butterfield, "Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it. 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."
Slack was founded as a gaming company called Tiny Speck, originally based in Vancouver, which grew out of a previous gaming enterprise that launched another popular web tool. Butterfield co-founded Ludicorp with Caterina Fake in 2004, creating a massively multiplayer game called Game Neverending. But the company spun off one of its tools to become the photo-sharing app Flickr. Then, five years later, with seed funding for another game called Glitch, some of the Ludicorp team created a channel-based chat application that evolved into Slack — and Slack then took on a life of its own, with Glitch shutting down in 2012. Slack is now based in San Francisco and had around 1,600 employees as of last year.
Slack took the unusual route of a direct listing as opposed to a tradition IPO last year, and in the last eighteen months had seen its stock price move very little — until last week and the story about the Salesforce deal in the works. Salesforce's stock price soared from $29.55 last Wednesday morning to nearly $44 today.
In a statement today, Butterfield 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 organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility.
He added, "Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going."
Top photo: Stewart Butterfield speaks onstage at the WIRED25 Summit 2019 - Day 1 at Commonwealth Club on November 08, 2019 in San Francisco, California. (Photo by Phillip Faraone/Getty Images for WIRED)