Salesforce has agreed to purchase Slack, the work place messaging app for $ 27.7bn (£ 20bn) in what could be one of the biggest technologies deal in recent years.
Marc Benioff, head of major software business firm, called the agreement a “match made in heaven”.
He has been seeking to increase the company’s software offerings and to go head on with competitors such as Microsoft.
This deal comes as the COVID pandemic has increased the focus on work away from home on tools, such as Slack, which allows it.
Technical analyst Dan Ives of Wedbush Securities called it “buy now” or even “buy 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,” he wrote to investors after the announcement of the deal.
Slack, founded in 2009, gained praises through its offering of team discussions, which offer another way more convenient as compared to sending an email.
When it listed its shares publicly in 2019, it was priced at about $ 20bn.
However, its shares have plummeted after the launch and missed the skyrocketing enjoyed by other technology firms this year.
The company, which had an estimated 12.5 million users since the end of March, had difficulty joining Microsoft Teams, a similar product launched by the tech giant in 2016 and now has more than 100 million users.
Microsoft’s Interest In Slack
Four years ago, Microsoft considered buying Slack.
The agreement has never been implemented and Microsoft instead focuses on building its own platform. Microsoft teams have been created – a clear rival to Black.
When a multibillion-dollar company like Microsoft seems to be coming into your business – you have to worry.
At first, Slack was confident of the challenge, and even released a full page ad in the New York Times that welcomed the competition in 2016.
Looking back on it, it’s hard to see that ad as just another hubris.
Big Tech can kill small companies. Their sheer size and dynamic market environment make it extremely difficult to compete with them.
Microsoft began to change its muscles. It has started packing into Microsoft Teams with its Office Software.
Microsoft Teams is now used by almost 10 times as many people as Black.
If Slack thinks it’s fun to have Microsoft as a competitor in 2016, it certainly didn’t happen in 2020.
Its legal challenges claim that Microsoft is using its product to abuse competition.
Therefore, this discovery should be reflected in that context. Slack was a little stressed.
It has now been purchased by a very large fish – it will be better placed to compete with Microsoft.
However, there will be many who will use the case to complain about the plight of small tech companies, which will not be able to compete with a handful of tech giants.
Both companies are hoping that the binding will put them in a better position to take on more business software competitors, and especially Microsoft.
Microsoft business applications have seen tremendous growth as large numbers of people have switched to home-based systems due to the Covid-19 epidemic.
Microsoft’s business plan includes features such as the Black messaging service.
Technology company chief Satya Nadella commented earlier this year that “We have seen a two-year digital transition in two months”.
Both Saleforce and Black have had previous launches with Microsoft.
In 2016, Saleforce lost its main rival when it tried to buy business-focused social media services LinkedIn.
This summer, Slack filed a lawsuit against Microsoft in the European Union, alleging that the company was abusing its dominance in the market by consolidating its Groups into other products.
Under the terms of the Saleforce agreement, Slack shareholders must receive $ 26.79 in cash for each share – almost what they should have been at the beginning of November, before rumors surfaced to pay the price of each share to more than $ 43 from Tuesday. They will also receive additional shares in Salesforce.
The agreement, which will be reviewed by Slack shareholders, is expected to close next year.