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December 05, 2020

Salesforce, which buys Slack for $27.7 billion, will help both brands compete with Microsoft Teams.

Salesforce has announced that it plans to acquire Slack for $27.7-billion (U.S.) through a cash and equity agreement.

“Stewart and his team have built one of the most beloved platforms in the history of enterprise software, with an incredible ecosystem around it,” Salesforce President and CEO Marc Benioff said in a statement. “This is a match made in heaven. Salesforce and Slack will work together to shape the future of business software and transform the way everyone works in the all-digital world of working-from-anywhere. I’m excited to welcome Slack to Salesforce CRM. Ohana as soon as the transaction is completed.”

The acquisition will be the company’s largest, surpassing Salesforce’s purchase of Tableau for $15.7 billion in 2019 and MuleSoft for $6.5 billion in 2018. The deal would also be one of the largest software acquisitions in recent history, though not as big as IBM’s purchase of Red Hood in 2018 for $34 billion.

The Wall Street Journal and other media outlets reported last week that a deal was in the works, and on Monday MSNBC reported that the deal would be formally announced today after the markets close. Slack’s shares have risen since news of the deal first leaked, while salesforce sales fell. Salesforce reports Q3 earnings on Tuesday, December 1, and Slack reports Q3 earnings on December 9.

Salesforce, best known for its Customer Relationship Management (CRM) software, has expanded its portfolio of cloud-based offerings in recent years and now offers a range of solutions built around its Customer 360 platform. The company also provides cloud services for vertical sectors such as financial services, healthcare, communications, public sector, energy and media.

Slack gives Salesforce a solid position in the business collaboration market – something the company has tried to do in the past with its own Chatter product (which ended in 2013) and with the acquisition of Quip in 2016. As part of the announcement, the company said Slack would be “deeply integrated into every Salesforce Cloud” and become the new interface for Salesforce Customer 360. The deal should also help Slack compete with Microsoft Teams.

The purchase of Slack was a logical move for Salesforce CRM and should benefit both brands. However, Salesforce will need to add even more solutions and expand to acquire more businesses in its journey to become a platform company for businesses and compete with companies like Microsoft, Google and Oracle.

Source: techrepublic

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