On Tuesday both Salesforce and Slack confirmed the acquisition of the latter for $27.7 billion by the software company Salesforce. This acquisition will mark one of the biggest business deals in the software industry and also the biggest in the history of Salesforce to date. Salesforce is a cloud computing giant which after owning the new work-chat app will amplify the working connectivity globally. The company will have a better shot at giving tough competition to the tech giant Microsoft.
Salesforce was one of the earlier companies in the IT industry to sell software in the form of subscription service. This saved many small companies and individual workers the time to install the programs on PCs. But, the concept of the software subscription is not a unique idea anymore. Many companies especially the big tech giants are making such online services with lucrative packages to offer, for example, IBM and Microsoft. So, what’s Salesforce’s plan in the long run?
Slack Competing with Microsoft
Slack is an application used for messaging on a professional level. It is mostly used to enable communication among a group of people (especially workplace teams) which offers more than just one-to-one chatting service. Unfortunately with Microsoft Teams into Office 365, the demand for Slack was pulled down. In July, Slack launched a complaint against Microsoft in the European Union for illegally offering Teams in Office 365 subscription. And, customers will rather prefer a subscription where they are offered more than one service and everything is connected to ease the workflow. On top of this, some of the main products of Salesforce are in tough competition with Microsoft’s to stay afloat in the market. So, what is better than making a deal to make the company bigger and better?
The experts can see clearly that for Salesforce the main target is to outrun Microsoft as the latter is moving far ahead of Salesforce in terms of cloud computing. Marc Benioff, CEO and founder of Salesforce said that “Slack is a central nervous system for so many companies” and that “it’s a match made in heaven”. But, if it is only about outrunning Microsoft not every decision of the company might be fruitful.
The Salesforce – Slack deal
Salesforce is paying Slack $27.7 billion to close the deal. Under the agreements for this acquisition, the Slack shareholders will get $26.79 in cash and 0.0776 shares of Salesforce common stock for each share of Slack. And, this calculation gives an entire value of $27.7 billion according to the November 2020 closing price of Salesforce’s common stock. March believes that this acquisition and what it will lead to will become the future of enterprise software. And, as the entire world is now getting accustomed to the work-from-home habit, the two companies might have hit the jackpot after all.
Stewart Butterfield, CEO of Slack, believes that with every passing day enterprise software is becoming the core of any organization. So, to build products and services with less complexity, more flexibility, proper alignment, and organizational agility is the main goal. He also said that he believes this is the most strategic decision in the history of software.
The current reputation of Salesforce
It has been over two decades that Salesforce is providing computing solutions to customers around the globe. The company has achieved massive success and recently it is also expanding its business by several acquisitions. The company bought a data analytics specialist for $15.7 last year. The current market value of Salesforce is approximately $220 billion which is around seven-folds greater than it was almost a decade ago. Kate Leggett, an analyst predicts Salesforce made a very positive acquisition as Slack will be added to its software suite giving people a similar experience like Office 365. If there are no hiccups in the way, Salesforce will take full control of Slack by mid-2021.
An arsenal of perks
Though Slack is a very handy alternative for email and other online communication, it is not as popular as it was expected to be. It is used by many companies and government agencies but not a hot deal for the investors. So, by selling it to one of the leading software companies in the world, Slack just made a perfect exit embarking on a new journey. With Slack being acquired now it will have a broad customer base of the Salesforce and attract new customers as well for the company.
Annasha Dey is an NIT student, who apart from studying engineering is also a content writer. She has a great interest in photography, writing, reading novels, and travelling as well. She is a foodie who loves socializing and hanging out with her friends. She is also a trained Kathak dancer and a big fashion enthusiast. Dey also loves watching TV series, which includes F.R.I.E.N.D.S. and Big Bang Theory. To be a better writer she prefers to read more