Salesforce challenges Microsoft with Slack megadeal

In the largest deal of its 21 year history, Salesforce has acquired workplace messaging app Slack Technologies, in a bid to offer a cohesive platform to match rival Microsoft and its Teams chatting service.

Valued at $27.7bn (£20.6bn), the deal will see Slack integrated into every Salesforce cloud as the new interface for Salesforce Customer 360, transforming how people communicate, collaborate and take action on customer information across Salesforce.

Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, totalling a $45.5 per share, based on Salesforce’s closing price on 30 November.

Describing the deal as “a match made in heaven”, Marc Benioff, chair and CEO at Salesforce, said: “Slack has built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it. 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.”

Though a deal between Microsoft and Slack was on the cards back in 2016, Microsoft opted instead to set up its own chat platform, Microsoft Teams, which includes a number of similar features to Slack’s messaging application. Having struggled against the tech giant over the last four years, Slack made an official competition complaint in the European Union earlier this year, where it accused Microsoft of abusing its market dominance by illegally bundling Teams into its Office 365 suite in a way that blocks its removal by customers who may prefer other messaging options.

Stewart Butterfield, CEO and co-founder of Slack, 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. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

Both Slack and Salesforce hope that the new deal will put them in a better position to compete with rivals like Microsoft in the cloud wars moving forward.