Salesforce (NYSE:CRM) announces Slack (NYSE:WORK) acquisition

Cloud giant Inc (NYSE: CRM) has announced that it will acquire Slack Technologies Inc (NYSE: WORK) in a $27.7 billion cash deal

| More on:
big fish eating smaller fish ASX shares M&A 2021

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More Inc (NYSE: CRM) is one of the largest and oldest ‘cloud’ companies in the world. And it looks set to become even larger. Salesforce announced this morning (AEDT time) that it will acquire the workplace communications company Slack Technologies Inc (NYSE: WORK).

About the companies

Salesforce was founded back in 1999, and today provides customer relationship management services as well as marketing automation, analytics, and application development services. This company has been on a tear in 2020 (and before that). Salesforce shares have climbed 44.53% in 2020 so far. It gets better. The company has climbed 193% over the past 5 years, and 576% over the past decade. On the current share price of US$241.35 a share, Salesforce has a gigantic market capitalisation of US$219.6 billion.

Slack is a US$25 billion company which specialises in intra-workplace communication via its eponymous flagship app. Billed as an ’email killer’, Slack allows colleagues to communicate and share data, documents and other items with each other. It has been growing handsomely in recent years, including posting an annual revenue growth number of 49% in a recent quarterly update.

Acquisition news

Salesforce announced it would be acquiring Slack in a stock/cash arrangement. Each shareholder of Slack will receive US$26.79 in cash per share under the deal, as well as 0.076 shares of Salesforce for every share of Slack owned. That offer values Slack at a market cap of roughly US$27.7 billion

Slack shares had been trading between US$25-$29 for most of November. However, the stock jumped almost 40% last week to roughly US$40 a share when rumours of this deal began circulating. Last night (our time), Slack shares closed at US$43.84, representing a market cap of US$25.01 billion.

Salesforce + Slack: A blessed union

Salesforce had this to say on the merger:

[The] combination of [the] #1 CRM platform with the most innovative enterprise communications platform will create the operating system for the new way to work, enabling companies to grow and succeed in the all-digital world… 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’s management was equally exuberant, with CEO Stewart Butterfield stating the following:

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

It seems this announcement is a done deal. However, it’s worth noting that, although the boards of directors of both companies have approved the deal, Slack shareholders have yet to sign off on it. Although, Slack’s management has recommended they do so. If they indeed give the green light, the merger is only expected to be completed “in the second quarter of Salesforce’s fiscal year 2022″.

Sebastian Bowen owns shares of Slack Technologies. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends and Slack Technologies. The Motley Fool Australia has recommended Slack Technologies. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Virtual goggles
International Stock News

Here are 2 safe Metaverse stocks for risk-averse investors

These tech companies could benefit in a big way from the creation of the metaverse, but they're already highly profitable…

Read more »

Electric vehicle being charged.
International Stock News

Tesla shareholders approved a 3-for-1 stock split — is the stock a buy?

Tesla's share price has climbed 77% since its last stock split in August 2020.

Read more »

A graphic of a non-fungible token
International Stock News

This NFT-linked cryptocurrency just surged into a top-30 spot

Judging by Flow's price action of late, the NFT space could be one to watch right now.

Read more »

The word cryptocurrency on a round clock.
International Stock News

Why Polkadot, Solana, and Cardano are 3 altcoins in focus today

Investors appear to be increasingly focused on fundamental growth metrics in the crypto world.

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
International Stock News

Why US growth stocks jumped today

The market is back in "risk-on" mode.

Read more »

The word crypto spelt out in front of a blue background.
International Stock News

Why Bitcoin, Ethereum, and Dogecoin are shooting higher today

Top cryptocurrencies are starting the week off with a bang as investors take a bullish view of these risk assets.

Read more »

happy family playing video game
International Stock News

Why GameStop stock is gaining today

Another meme-stock rally pushed the video game retailer higher.

Read more »

woman with coffee on phone with Tesla
International Stock News

Here’s why Tesla stock popped today

Investors had two bits of good news today.

Read more »