Salesforce decided that it needed to become more competitive with Microsoft for the number two position by market capitalization in the tech industry. The company confirmed in December 2020 that it was acquiring Slack, a popular workforce chat platform, in a deal worth almost $28 billion.
Slack is the most significant acquisition for Salesforce to date, offering shareholders of the chat platform $26.79 in cash with 0.08 Salesforce shares for each Slack share owned.
It is a move that lets Salesforce play offense against Microsoft while defending their current position in the market from smaller disrupters.
Slack Was First Listed in June 2019
It’s been a decent 18 months for Slack since it first got listed on the New York Stock Exchange in 2019. Share pricing started at $26, and it quickly climbed to $39 by the end of the trading day. Over the next three months, the price would return to the starting level as investors started worrying about Microsoft.
Once Slack proved that it could hold its own, shares reach $40 to compete with the other stay-at-home services people were using due to the pandemic.
Salesforce has also acquired two other significant assets since 2018 to position itself better for the future. It took on MuleSoft in 2018 for $6.5 billion, while Tableau’s data visualization was valued at $15.3 billion for the acquisition.
Salesforce Said It Wasn’t In the M&A Business
Marc Benioff, the Chairman and Chief Executive Officer of Salesforce, told investors earlier in 2020 that the company wasn’t interested in any mergers or acquisitions.
Wall Street is trying to cope with the change in tune from the Q2 investor earnings call. With Salesforce officially striking a deal for Slack, people wonder if there was an about-face – or if this was the plan all along.
Slack investors got an extra boost in their shares from the news. It spiked 25% in anticipation of the information.