The US technology giant will buy the office messaging app using a combination of cash and shares
The US technology giant Salesforce is buying office messaging app Slack for $27.7bn (£20.6bn) in one of the world’s largest ever software deals.
Salesforce, run by the billionaire entrepreneur Marc Benioff, will buy the company using a combination of cash and shares, it said on Tuesday.
The alliance unites the two internet companies against Microsoft, the world’s biggest software company. It will also result in a $2.5bn windfall for Slack’s co-founders, chief executive Stewart Butterfield and Cal Henderson, its British technology chief. Mr Butterfield’s stake is valued at $1.8bn by the deal and Mr Henderson’s around $750m.
Slack was launched in 2013 as a way to replace inter company emails with a live chat service, and quickly became popular among tech start-ups and media companies. However, its rise has been stunted by Microsoft, which launched a rival service in 2017 and has pushed it to the hundreds of millions of Office subscribers.
Before rumours of Salesforce’s takeover emerged last week, Slack’s shares had fallen since going public last year, despite the rise in online company software during the pandemic. Salesforce, valued at $220bn, saw shares fall 4pc after Tuesday’s announcement.
The companies said the deal would create a powerhouse in software for businesses. Salesforce’s main technology, known as customer relationship management, is used by companies to keep tabs on sales and communications with clients and customers.
Slack, which started off as a way for employees to message one another, has sought to become an online command centre for work, integrating with other services such as cloud storage and word processing. Both have been pioneers in “cloud” software that runs entirely online.
Announcing the deal, Salesforce said it would “create the operating system for the new way to work”. The acquisition is the biggest to be pulled off by Mr Benioff, who has regularly acquired new companies and bought Time Magazine for $190m in 2018. Salesforce’s founder once came close to buying Twitter, but backed out of negotiations.
The companies said they expect the deal to close before the end of July next year. Mr Butterfield, who will remain at the company, said: Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.
Mr Butterfield and Mr Henderson started Slack as a video game company called Tiny Speck in 2009 before changing direction to focus on the communication tool they had built. Previously, the two had founded photo sharing site Flickr, which was sold to Yahoo for $25m in 2005.