Salesforce, the CRM powerhouse, announced at the commencement of 2020’s last month, that it would acquire the workplace software company, Slack, for $27.7 Billion, using a combination of cash and stock. The boss of this business software giant named this deal a “match made in heaven“.
The increasing remote work and tools, in the on-going pandemic, gave an exclusive way to this acquisition. Tech analyst Dan Ives of Wedbush Securities called it a “now or never” purchase for Mr Benioff.” If Salesforce wants to expand beyond its core gold mine of sales and marketing departments … this was the moment and thus represents a major shot across the bow against Microsoft,”, a note by him to his investors revealed his words after the announcement of this biggest deal.
Founded in 2009, Slack was left with just 12.5 million users till late March’2020 that was being tough for it to make inroads against Microsoft Teams. A similar product, Microsoft Teams was rolled out in 2016 by a tech giant, and today, it holds 100 million and more users.
Bringing Tale into The Limelight
Let you know the whole story.
About four years back, Microsoft was looking into buying Slack. But, this deal was never accomplished, as Microsoft turned its target onto developing a platform in its name. This resulted in the creation of Microsoft Teams, a straight rival to Slack.
It’s natural for any brand to get worried when a trillion-dollar giant like Microsoft, looks to move in their business.
In the beginning, Slack was quite confident and was all set to face the challenge, even it revealed through a full-page ad in the New York Times, putting both hands apart welcoming this competition, in the year 2016. On turning back to it, it’s tough to witness that that advert was like something more than hubris.
Well, obviously, Big Tech can smash the smaller companies as their dominance and sheer size in the market may become a weakness for them.
Later, Microsoft started stretching apart its boundaries by bundling Microsoft Teams with its Office Software. Today, Microsoft Teams is used 10 times more as compared to Slack.
If Slack thought it to be a fun, challenging Microsoft in 2016, might have regretted this year. As per the claim of its legal challenge, Microsoft used its heft to bully the competition unfairly. This competition makes it clear that Slack was being squeezed gradually.
Watching from another angle, this acquisition will trigger a rivalry of Salesforce with Microsoft, whose Teams video and chat service has appeared as the stiffest competitor of Slack.
According to a report written by Dan Ives, an analyst at Wedbush on Monday,
“This deal will be a major shot across the bow at Microsoft,”. Also, he recommended buying Salesforce shares and said that Teams “has been a clear hurdle to growth”
for Slack, and the market will now become
“a two-horse race between Microsoft and Salesforce.”
The brands are fitting in various other areas also. Today, Salesforce is the ruling player in CRM software, whereas Microsoft is a challenger at a distance. Both the giants tried to acquire LinkedIn, a business-focused social media website, but between the two, Microsoft won the show.
A Talk About The Giant
Well, both the giants hold a thought that the tie-up will offer them a better space to rule and acquire various enterprise software competitors, and especially Microsoft.
Business apps of Microsoft have experienced an excessive spike as many people turned to the work-from-home edge because of Covid-19.
The business suite of Microsoft embraces the features that look akin to the messaging service of Slack.
This year, CEO Satya Nadella, the tech giant remarked that
“We’ve seen two years’ worth of digital transformation in two months”.
Previously, Salesforce and Slack both were having clashes with Microsoft.
In 2016, the biggest rival of Salesforce slipped from its hands when it tried to acquire a professional networking site, LinkedIn.
On the other edge, recently, in March, Slack came with a competition challenge against Microsoft in the European Union, stating that the firm was abusing its dominance in the market by bundling Teams with its other products.
According to a statement, through a combination of stock and cash, Salesforce is acquiring Slack for .0776 shares of Salesforce, and $26.79 per share. This comes out to be $45.86 a share.
Last week, before the initial reports of a deal, the stock was trading below $30 which resulted in a 38% pop in shares of Slack.
The deal that is going to be reviewed by shareholders of Slack is anticipated to close in 2021.