In the undoubtedly biggest big tech merge of the year, Salesforce buys the team collaboration platform Slack! The deal is worth $27.7 billion and will give Slack a competitive edge in competing against its biggest rival – Microsoft Teams.
After Weeks Of Rumours, Acquisition Was Confirmed
The mega-acquisition was confirmed yesterday, after the rumors that have been circulating for a couple of weeks. The cloud software giant, Salesforce, initially founded in 2001, is known for its customer management relationship services (CRM) and the buy of Slack can bring them major advantages as the online-work-tools are experiencing their golden age.
From Multiplayer Game Company To Team Collaboration Platform
Slack was initially founded as an online multiplayer game company in 2009. Although that idea did not work out, the communication system used in the game has eventually evolved into what we know as Slack. The company has, thus, been known under its current name for the past 7 years. It went public on the New York Stock Exchange in June of 2019. The trading opened at $38 with a valuation of $23 billion.
Slack’s Price Reaches Record High Level
Following the news of the merger, Slack’s share price has reached a level it has not seen in months! In the last quarter, the price varied between $25 and $32, but yesterday it reached $45, giving it a market capitalization of $25 billion. The shareholders of Slack are going to receive $26.79 in cash, alongside 0.0776 shares of Salesforce common stock for each Slack share they own.
“Match Made In Heaven” Acquisition
Marc Benioff, the CEO of Salesforce has referred to the acquisition as the “match made in heaven”. He continued by saying that the deal between companies will allow them to “shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world”
Similarly, the CEO of Slack, Steward Butterfield, said, “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. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going,”
Will Salesforce And Slack Be Able To Compete With Microsoft?
Dan Ives, a tech analyst claimed, “If Salesforce wants to expand beyond its core gold mine of sales and marketing departments … this was the moment and thus represents a major shot across the bow against Microsoft”
Slack Struggling To Keep Up With Microsoft Teams
Although this year has seen a record-high boost for the work-from-home software, Slack has not been able to catch up to its competitors. Microsoft Teams has far outperformed the smaller company that has not had a great performance in the Q2 of 2020. It is not surprising that Slack has struggled with adjusting to the Covid-19 crisis at the same pace that its rival. One must remember that the difference in sizes and resources between them and Microsoft.
Let us look at some of the most common questions about the big tech merge of 2020!
Was the acquisition expected?
It was not unexpected. Salesforce and Slack have had a good business relationship for several years and their professional cooperation started already in 2016. Slack announced that users will be able to connect Slack and Salesforce back in 2016. It could be integrated using Webhooks, Slash Commands, and Bots. Thus, Salesforce could already see qualitative and quantitative data on advantages, as well as the opportunities coming from integrating Slack into their own products.
When will the transaction close?
The transaction will most likely close in the next year, with the projection laying on the second half of 2021. After that, Slack will officially be an operating unit inside Salesforce
Who will be the CEO?
Steward Butterfield who has been the co-founder of Slack and is the current CEO will continue to hold his position after the bigtech merge.
Why did Slack struggle?
Before going public, Slack had an impressive $7 billion valuation and raised more than $1 billion. Since the beginning of its operations as “Slack” in 2013, the company has had an extraordinary performance. In the first 24 hours of their launch in 2013, they gained 8000 users, a number that is unheard of. In 2017, they have been awarded the “Startup of The Year” title, given out by TechCrunch.
They have had unprecedented growth in its first year. At the beginning of 2015, the company had approximately 10, 000 daily users, and at the end of the same year, the number has increased to almost a million daily users. Thus, their initial growth has been unprecedented. Having said that, once Microsoft decided to fight for that share of the market and launched its Microsoft Teams, it became increasingly harder for Slack to compete with its older and much bigger rival. In March of this year, Slack had 12.5 million users while Microsoft had approximately 100 million.
How will Salesforce benefit from the big tech merge?
Although Salesforce already launched its social collaboration software, it has not quite taken off. With Slack, Salesforce will be able to create much deeper integrations across many of its products. The Slack connect that was launched recently and provides the possibility for multiple organizations to cooperate in one channel will be a very useful team for Salesforms.
How will Slack benefit from the big tech merge?
As sad as it is, it is hard to stand a chance to a giant like Microsoft. Slack on its own was not as powerful as the trillion-dollar company. Being a part of Salesforce provides Slack with a more powerful position and reduces the gap between them and Microsoft. Will they be able to outperform them? As of right now, that is still hard to believe. However, maybe we will be surprised.
What role does Microsoft play in the big tech merge?
Microsoft actually looked into buying Slack back in 2016. However, it has instead decided to develop Microsoft Teams which has eventually become the biggest rival. Slack’s initial reaction can be perceived as a little cocky. They took out a full-page advert in the New York Times, advising Microsoft on how to proceed with their new team collaboration platform.
Moreover, both Slack and Salesforce have had previous conflicts with Microsoft. Salesforce tried to buy the big-hit of business social media, LinkedIn and lost to Microsoft. Slack, on the other hand, went as far as bringing an EU competition complaint against Microsoft, claiming they have been abusing market dominance by bundling Teams into their products. Thus, it will be interesting to see the competition that is to come between the joined power of SalesForce and Slack against one of the most successful companies of all time.