Salesforce buying Slack for $27.7 billion will help both brands compete against Microsoft Teams

Salesforce is acquiring Slack in a deal to help it compete with Microsoft Teams in the hotly contested workplace collaboration space.

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Salesforce has announced its intentions to purchase workplace collaboration company Slack for $27.7 billion (US) in a cash and stock deal.

"Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it," said Marc Benioff, Chair and CEO, Salesforce, in a statement. "This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world. I'm thrilled to welcome Slack to the Salesforce Ohana once the transaction closes."

The acquisition will be the company's biggest, surpassing Salesforce's purchase of Tableau for $15.7 billion in 2019 and MuleSoft for $6.5 billion in 2018. The deal would also be one of the largest software acquisitions in recent history, although not as large as IBM's purchase of Red Hat in 2018 for $34 billion. 

The Wall Street Journal and other media outlets reported last week that a deal was in the works, and on Monday MSNBC reported that the deal would be formally announced today after markets close. Shares of Slack have risen since news of the deal first leaked, while sales of Salesforce have fallen. Salesforce is due to report Q3 earnings on Tuesday, December 1, and Slack is scheduled to report Q3 earnings on December 9.

SEE: Checklist: Mergers & Acquisitions (TechRepublic Premium)

Salesforce, best known for its customer relationship management (CRM) software, has expanded its portfolio of cloud-based offerings in recent years and now offers a suite of solutions built around its Customer 360 platform. The company also offers cloud services for industry verticals, such as financial services, healthcare, communications, public sector, energy, and media.

Slack gives Salesforce a solid foothold in the enterprise collaboration market--something the company has tried to do in the past with its own Chatter product (which was ended in 2013) and with the 2016 acquisition of Quip. As part of the announcement, the company said that Slack would be "deeply integrated into every Salesforce Cloud" and would become the new interface for Salesforce Customer 360. The deal should also help Slack compete against Microsoft Teams. Slack currently charges companies $80 - $150 per month per user seat, while Teams is currently bundled with most Office 365 plans, which start at $60 a month per user.

Purchasing Slack was a logical move for Salesforce and should benefit both brands. However, Salesforce will need to add even more solutions, and by extension acquire more businesses, in its journey to become an enterprise platform company and compete with the likes of Microsoft, Google, and Oracle.

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By Bill Detwiler

Bill Detwiler is Editor in Chief of TechRepublic and the host of Cracking Open, CNET and TechRepublic's popular online show. Prior to joining TechRepublic in 2000, Bill was an IT manager, database administrator, and desktop support specialist in the ...