Salesforce will acquire Slack, the workplace communication firm that has vowed to replace email, in a combined cash-stock deal worth roughly $27.7 billion, Salesforce announced on Tuesday.
Together, the firms plan to “shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world,” says Marc Benioff, CEO of Salesforce.
Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, Salesforce reports.
The transaction -- reportedly the firm's largest -- is expected to close in the second quarter of Salesforce’s fiscal year 2022, subject to shareholder and regulatory approval.
Salesforce will fund the cash portion of the transaction consideration with a combination of new debt and cash now on its balance sheet, it says.
The firm has obtained a $10.0 billion senior unsecured 364-day bridge loan facility from Citigroup Global Markets Inc., Bank of America, N.A. and JPMorgan Chase Bank, N.A.
The purchase puts Salesforce on track to compete with Microsoft Teams, and will help it meet a critical shift in behavior due to the pandemic, some observers say.
Slack will become an operating unit of Salesforce at the close of the transaction. CEO Stewart Butterfield will continue to lead it.
In addition, Slack will be “deeply integrated” into every Salesforce Cloud, and provide a single source of truth, Salesforce says.
In other news, Salesforce has announced third-quarter revenue of $5.42 billion, a roughly 20% increase.
The CRM firm also reports a third-quarter GAAP operating margin of 4.1%, and non-GAAP margin of 19.8%.
“We had another record quarter, and now we’re raising our FY21 revenue guidance to $21.11 billion at the high end and initiating FY22 guidance of $25.5 billion,” Benioff adds.
Salesforce has been “doubling down on customer-centric digital offerings like commerce, sales, marketing and experience,” says one observer, Scott Webb, CEO of marketing platform Avionos.
The Slack purchase shows that Salesforce understands “the way organizations' functions have changed for the long-haul,” Webb adds. “Remote collaboration and streamlined communication will be the norm going forward.”
Earlier this year, Salesforce acquired Evergage, a firm that helps brands deliver personalized experiences via email, web, mobile, ad technology, social and other channels.
For its part, Slack introduced a product called Slack Connect, designed to help firms build relationships with external partners and overcome the challenges of collaborating with multiple organizations, it says.
The Wall Street Journal states that Slack has a market value of $17 billion.
Earlier this year, Slack said it had 85,000 users worldwide and $400 million in 2019 revenue, while generating a loss of $138 million.