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Salesforce buys Slack for $27.7bn

Slack is a rival to Microsoft Teams; The combination will create an operating system for the new way to work

Salesforce buys Slack for $27.7bn

San Francisco : In one of the biggest deals in its history, Cloud software firm Salesforce has announced to acquire Microsoft Teams rival and enterprise chat platform Slack for $27.7 billion.

Salesforce is a leader in the Customer Relationship Management (CRM) market but unlike Zoom, Microsoft Teams and Google Meet, Slack hasn't seen a meteoric rise as video meetings surged during the pandemic. This acquisition could help Slack cement its position in the remote working era.

As of October, there were 115 million daily active users of Microsoft Teams while Slack had 12 million users in 2019 (the last that it reported active users). According to Salesforce, combining Slack with its Customer 360 platform will be transformative for the industry.

The combination will create the operating system for the new way to work, uniquely enabling companies to grow and succeed in the all-digital world. "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," said Marc Benioff, Chair and CEO, Salesforce.

Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion. "The opportunity we see together is massive," said Stewart Butterfield, Slack CEO and Co-Founder.

As software plays a more and more critical role in the performance of every organisation, "We share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organisational agility," he elaborated. According to market research firm Forrester, the acquisition makes sense on paper.

"Salesforce has not yet dipped its feet into the back office, instead spreading its reach, and fueling its revenue stream, by purchasing MuleSoft integration software used to connect applications, data and devices together; and Tableau, an enterprise BI platform," said Kate Leggett, Vice President, Principal Analyst at Forrester. Slack demos often incorporate bots and workflows that operate on systems of engagement or systems of record data. "The purpose is to serve users who are not "heads down app users" with a simpler interface that is more geared towards conversations and collaboration. While this may open up Salesforce to a reduction in classic Salesforce licenses, it does pull in a wider user base able to work on its overall platform," Leggett elaborated.

While Slack may replace in Salesforce customer accounts, this move will not erode Microsoft Teams penetration - in and outside of Salesforce accounts. Slack in June this year joined Amazon in a multi-year agreement to take on its closest rival Microsoft Teams. Under the new deal, all Amazon employees will get access to Slack's office tools. After claiming that Microsoft Teams is not a real competitor to Slack, Butterfield said in May that the success of Slack threatens Microsoft's entire Office 365 empire.

Slack will be deeply integrated into every Salesforce Cloud. As part of the world's leading CRM player, Slack will be able to expand its presence in the enterprise, not just among Salesforce customers, but for any company undergoing digital transformation, the company said. (IANS)

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