What happened: Salesforce acquires Slack in US$27.7b deal
Why it matters: The business-messaging app was founded by Vancouverite Stewart Butterfield, who maintains offices in the city
Messaging service Slack Technologies Inc. (NYSE:WORK), which traces its origins to Vancouver, has someone new to answer to.
Salesforce.com Inc. (NYSE:CRM) is acquiring the tech company in a cash-and-stock deal worth US$27.7 billion.
The acquisition, announced Tuesday (December 1) by the customer relationship management giant will give Slack more power to compete with bigger competitors such as Microsoft Corp. (Nasdaq:MSFT) in the business-messaging space.
While demand for digital communications tools has surged amid the pandemic, shares for Slack have been on the downward trend since the company went public last year when it opened at US$38.50 a share.
Shares were trading below US$30 for most of November until speculation ramped up about an acquisition over the past week.
Shares are now trading at $43.83, as of the close of markets Tuesday.
“Personally, I believe this is the most strategic combination in the history of software and I can’t wait to get going,” Slack CEO and Vancouverite Stewart Butterfield said in a statement.
Slack’s business-messaging app grew out of an internal messaging tool at Butterfield’s Vancouver-based gaming startup, Tiny Speck.
The game being developed by Tiny Speck, Glitch, never really took off but the messaging tool proved valuable to the company.
Before Tiny Speck re-launched as Slack, Butterfield was best known as one of the co-founders of Flickr, the image-hosting site Yahoo Inc. acquired for about US$25 million in 2005.
Although Slack is based in San Francisco, the company maintains offices in Vancouver.
“I like it and it’s home,” Butterfield told BIV in 2014, referring to Vancouver, where much of Slack’s design and front-end development takes place.
“I really enjoy design and working on the product. So when I’m in Vancouver, I can kind of retreat – it’s a little bit quieter – and focus more on product decisions.”
As part of the acquisition deal, Slack shareholders will receive US$26.79 in cash and 0.0776 shares of Salesforce for each Slack share.
The US$27.7 billion value of the deal is based on the closing price of Salesforce shares as of November 30.
The deal is expected to close during the second quarter of 2022.
Once completed and Slack becomes an operating unit under Salesforce, Butterfield will continue to lead the messaging service as its CEO.
Meanwhile, Salesforces plans to integrate Slack into its Salesforce Customer 360 CRM platform.