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CRM giant Salesforce recently officially announced the acquisition of Slack, an enterprise communication software. Salesforce will acquire Slack, a corporate communication software, for a total price of US$27.7 billion through a combination of cash and stock. For the transaction, Bank of America served as Salesforce's financial advisor, while Qatalyst Partners and Goldman Sachs advised Slack.
This is the largest acquisition in the 21 years since Salesforce was founded. It is also the second largest acquisition in the history of the software industry after IBM acquired Red Hat for $34 billion in 2018.
According to a statement issued by Salesforce, the specific price of the transaction is $26.79 per Slack stock plus 0.0776 shares of Saleforce stock, including outstanding stocks, debt and cash.
The negative chain reaction brought about by the epidemic
Slack is not easy
Logan Purk, a senior analyst at the financial consulting firm Edward Jones, believes that the deal between Slack and Salesforce also proves the fierce competition in the software market. He said that without game-changing products and large amounts of capital, "you will be swallowed or fail."
"It's hard for a start-up startup to compete with the 800-pound gorilla, and this gorilla is still one of the most well-funded companies," he said when talking about Slack, which is more or less saying: " We (Slack) can no longer compete with Microsoft Teams, we need more ammunition support."
Although the demand for Slack continues to grow as people work from home during the new crown pandemic, the company said in September that in the three months ending in July, revenue increased by 49% to $216 million. But even so, it also said that it does not expect this growth to continue, and the layoffs of some customers have adversely affected its business.
On Tuesday, Slack’s financial report showed that the company’s revenue for the third quarter of fiscal 2021 was $234.5 million, a year-on-year increase of 39%. But at present, the company is still not profitable. This leaves Slack with no clear way to overcome the growing competition from Microsoft Teams. So Slack has been struggling.
Microsoft Teams reported that the number of daily active users in October was 115 million, an increase of 50% from April. Slack's latest disclosure of daily active users was 12 million in October 2019.
In July of this year, Slack filed a complaint against Microsoft to the European Commission, claiming that Microsoft bundled Teams with the Microsoft Office office suite. Since Teams was released in 2017, it has provided services together with Office.
"Made in heaven"
"Software plays an increasingly important role in organizational capabilities. We will reduce office complexity, increase flexibility, and ultimately achieve the highest vision of organizational collaboration and agility." Slack CEO Stewart Butterfield (Stewart Butterfield) Said.
Salesforce CEO Marc Benioff called the acquisition a "match made in heaven," because the addition of Slack enables the company to provide a unified platform for companies to connect with employees and connect with employees. Microsoft's Teams compete.
DA Davidson analyst Rishi Jaluria (Rishi Jaluria) said: "This transaction enables Salesforce to have deeper collaboration and business communication. In addition, it is also beneficial to Slack, especially expanding its use of non-tech The company’s penetration rate."
Foreign media commented that, unlike Slack's stock price, which experienced a roller coaster-like climb and a sharp decline, the market value of Salesforce has begun to expand in recent months, and its stock price hit a record high in September. The financial report shows that Salesforce's third-quarter revenue was 5.42 billion US dollars, a year-on-year increase of 20%. The combination of Salesforce and Slack ensures that both platforms can better compete with Microsoft, Oracle and other cloud computing companies in the future.
Regarding the proposal of the acquisition, Benioff said on the conference call that Bret Taylor, the president of Butterfield and Salesforce, proposed the transaction to him.
Taylor said that buying Slack will help Salesforce's customers in their digital transformation. Approximately 90% of Slack's corporate customers also use Salesforce.
After the acquisition is complete, Slack will become an operating unit of Salesforce, and Slack CEO Stewart Butterfield will continue to lead Slack.
SoftBank misses Slack 's premium revenue
As early as September, SoftBank sold all of its shares in Slack for more than $1 billion, so this Slack's once largest investor missed the premium that Salesforce was going to pay.
Relevant information shows that SoftBank sold its stock in the second and third quarters of 2020. Around that time, Slack's stock price went from about $25 to nearly $40. As of September 4, SoftBank's stock has been sold out, when the stock price was just under $34.
SoftBank used to be an active investor in Slack.
In 2017, SoftBank led Slack's Series G financing and subsequently bought Slack stock. According to Slack's IPO prospectus, SoftBank purchased Slack stock at a price of $8.70 to $11.91 per share between 2017 and 2018. SoftBank revealed that its previously held Slack shares totaled 334 million U.S. dollars and sold them for slightly more than 1 billion U.S. dollars.
Foreign media said that if Salesforce's huge acquisition of Slack proceeds as planned, and the acquisition is completed before July 2021, it will benefit many Slack investors, including venture capitalist Accel and Social Capital's Chamath Palihapitiya. Unfortunately, SoftBank succumbed early.
SoftBank has not yet commented on this matter.
After the media reported the acquisition last week, Slack's stock price rose nearly 40%, closing today at $48.34. Salesforce shares today closed at $241.35. (Qin Conghui, editor of Titanium Media, compiled from The New York Times, Washington Post, Business Insider, The Verge, etc.)
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