Cloud software company Salesforce is in advanced talks to buy the work messaging software Slack, according to a report by WSJ. The deal, if it goes through, will be the biggest acquisition made by Salesforce till date. The announcement of the deal could be made as early as next week.
Slack has a market value of more than $17 billion as of Wednesday morning, and since the news of the acquisition was reported, shares of the company were up by 22 percent.
San Francisco-based Salesforce provides customer relationship management (CRM) service and also sells a complementary suite of enterprise applications focused on customer service, marketing automation, analytics, and application development. With a market value of around $230 billion, the 21-year-old company was one of the very few that gained from the pandemic situation due to the surge in the use of cloud-based software. In recent years, Salesforce has been in tough competition with other business software vendors such as Microsoft.
The rivalry between the two heavy giants would get more intense if Salesforce successfully acquires Slack. The roots of the rivalry can be traced back four years, when Microsoft successfully bought LinkedIn, a company in which Salesforce was also interested.
Microsoft in recent times has been pushing their Teams suite, which provides similar features to Slack.
Slack offers IRC-style features, including persistent chat rooms (channels) organized by topic, private groups, and direct messaging.
Stewart Butterfield, Co-founder and Chief Executive of Slack Technologies in recent times has been trying to transform the company into more than a communications tool for business. The online communications software has recently partnered with other software vendors and has been trying to transform itself into a platform through which companies can access a variety of services they need to run their operations, offering interfaces for other business-tool providers.
Although the work from the home situation around the world has made growth in cloud-based software, Slack has failed to attract users. The company has lagged following two-quarters of disappointing earnings and thereafter news of the acquisition came through. Despite the cloud software sector seeing a 78 percent surge this year, Slack traded 23 percent below its closing price on the first day of trading last year.
In recent years, Salesforce has made several acquisitions. In 2019 they brought in Tableau Software, a data analytics software under their wings in a deal amounting to $16 billion. In 2018 the company acquired network software maker Mulesoft for $6.5 billion.