Salesforce snaps up Slack for US$27.7bn to 'shape future of enterprise software'

Salesforce is acquiring Slack for approximately US$27.7 billion in a cash-and-stock deal. Upon the close of the transaction, Slack will become an operating unit of Salesforce and will continue to be led by CEO Stewart Butterfield. The latest deal is nearly twice as large as the US$15.7 billion acquisition of Tableau which Salesforce carried out last year, and is a shift from its core CRM business model. 

According to Salesforce, the Slack acquisition will offer clients a unified platform for connecting employees, customers and partners with each other and the apps they use every day, all within their existing workflows. It also offers clients "a single source of truth" for their business. Slack brings people, data and tools together so teams can collaborate from anywhere. Slack Connect, which was introduced in June this year, enables communication and collaboration between a company's employees and all its external partners, from vendors to customers.

As part of the acquisition, Slack will be and deeply integrated into every Salesforce Cloud. As the new interface for Salesforce Customer 360, Slack will transform how individuals communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems. Salesforce explained that this will enable clients to be more productive, make smarter, faster decisions and create connected customer experiences.

Following the acquisition, Slack will be able to expand its presence in the enterprise scene. Among the list of clients it currently serves include Starbucks, Target and TD Ameritrade. Its open platform is able to integrate with more than 2,400 apps that individuals use to collaborate, communicate and get work done. The folding of Slack under Salesforce is said to create "the most extensive open ecosystem of apps and workflows" for business. Slack recently reported a 39% year-on-year (YoY) increase in revenue to US$234.5 million, adding 12,000 net new paid customers which marked a 140% YoY increase. Butterfield explained that the accelerating growth is partly driven by increased awareness and demand due to the work from home environment.

Salesforce chair and CEO Marc Benioff called the acquisition "a match made in heaven", adding that together, both companies "will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world".

Meanwhile, Butterfield said the opportunity for both companies is massive. "As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility. Personally, I believe this is the most strategic combination in the history of software, and I cannot wait to get going," he added.

Safe to say, Salesforce's latest move on Slack turns up the heat on Microsoft, which previously considered buying Slack for US$8 billion in 2016, TechCrunch reported then. In 2017, Microsoft launched Microsoft Teams, a chat-based platform that enables users to collaborate on files with built-in Office 365 apps such as Word, Excel and PowerPoint. Users can also host audio and video conferences via Microsoft Teams. 

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