50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Salesforce in talks to acquire workplace app Slack - sources

Published 11/25/2020, 12:26 PM
Updated 11/25/2020, 02:50 PM
© Reuters. FILE PHOTO: The company logo for Salesforce.com is displayed on the Salesforce Tower in New York
MSFT
-
ORCL
-
CRM
-
WORK
-

By Greg Roumeliotis and Krystal Hu

NEW YORK (Reuters) - Cloud-based software company Salesforce.com Inc (NYSE:CRM) is in talks to acquire workplace messaging app Slack Technologies (NYSE:WORK) Inc as it seeks to expand its offerings to businesses, people familiar with the matter said on Wednesday.

Salesforce's bid comes as Slack struggles to fully capitalize on the switch to remote working during the COVID-19 pandemic in the face of fierce competition from Microsoft Corp (NASDAQ:MSFT)'s Teams and other workplace apps

Slack shares ended trading on Tuesday at $29.57, well below the $42 high they reached on their first day of trading last year.

Salesforce sees the potential acquisition as a logical extension of its enterprise offerings, the sources said. The price it was offering for Slack could not be learned, though one of the sources said Salesforce would pay cash for the deal, rather than use its stock as currency.

If the negotiations conclude successfully, a deal could be announced before Slack reports quarterly earnings on Dec. 9, one of the sources added.

Neither Slack nor Salesforce responded to requests for comment.

Slack Technologies shares jumped 24% to $36.58, giving the company a market capitalization of $21 billion, while Salesforce fell 2.7% after the Wall Street Journal first reported that the two companies had held deal talks.

Slack has benefited from companies relying more on information technology systems to keep their workers connected during the pandemic.

Its app has been installed about 12.6 million times so far this year, up approximately 50% from the same period in 2019, according to analytics firm Sensor Tower.

But the economic fallout of the virus outbreak has forced Slack to give discount and payment concessions to many of its customers who have had to make cost cuts.

Seeking to save money, some companies have also been switching to Teams, which comes with many of Microsoft's office software packages.

"I think Microsoft Teams has been able to capitalize on the opportunity better than Slack, partly because they give it away for free as a bundle," said Rishi Jaluria, an analyst at research firm DA Davidson and Co.

"Now Slack realizes that they might be able to get greater penetration as part of a larger company."

Slack's billing growth, a key indicator of future revenue, slowed in the three months to the end of July.

Salesforce meanwhile has been thriving financially during the pandemic. It raised its annual revenue forecast in August as the pandemic spurred demand for its online business software that supports remote work and commerce.

© Reuters. FILE PHOTO: The company logo for Salesforce.com is displayed on the Salesforce Tower in New York

Salesforce has been beefing up its cloud business through acquisitions and had spent more than $16 billion last year to fend off competition from rivals such as Oracle Corp (NYSE:ORCL) and German competitor SAP.

(Reporting Greg Roumeliotis and Krystal Hu in New York; Additional reporting by Subrat Patnaik and Eva Mathews in Bengaluru; Editing by Arun Koyyur and Jan Harvey)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.