Chances are if you work in any sort of modern office setting or collaborative firm, you have heard of the tool Slack (NYSE:WORK). Slack ranks as one of the more popular collaborative tools and chat applications that companies can use and has an estimated 12 million daily active users, many of whom pay a subscription fee to use the premium version of the program. On Wednesday, as American investors headed into the Thanksgiving Holiday, a buyout rumor rocked the enterprise software industry and sent Slack’s stock surging by nearly 40%.
Tech giant Salesforce.com, Inc (NYSE:CRM) has been rumored by those close to the company to be in talks to acquire Slack for an undisclosed price that is said to be more than its $17 billion valuation. While Slack’s shares skyrocketed on the news, Salesforce actually saw its stock fall by over 5%, as investors in the software company seemed wary of the cost it was willing to pay for Slack. A purchase of this magnitude would be the largest that Salesforce has ever been a part of, and would rank amongst one of the most expensive in history.
Salesforce recently purchased Tableau Software, a digital analytics company, for just over $15 billion in 2019, and application network builder MuleSoft for $6.5 billion in 2018, so large buyouts are nothing new to the CRM industry leader. Like any good investor, Salesforce has been known to diversify its portfolio of acquisitions, and Slack would fit right into that. Its immediate need for Salesforce is not really known, but Slack has publicly struggled to maintain its place in the industry since a little company called Microsoft (NASDAQ:MSFT) introduced its Slack killer: Microsoft Teams.
Slack killer may be a touch overdramatic but at one point Microsoft was interested in buying out Slack, but instead developed Teams as a way to compete in the space. Microsoft always has the advantage of bundling programs into its Windows software, and unsurprisingly Teams has left Slack in the dust in terms of daily active users. The need for collaborative tools such as Slack and Teams has grown exponentially during the COVID-19 pandemic, as more companies seek to keep their employees safe by allowing them to work remotely.
A buyout would be interesting, and Slack investors are certainly optimistic after the stock has fluctuated throughout 2020, and has not seen the same gains as other stay-at-home stocks like Zoom (NASDAQ:ZM) or Netflix (NASDAQ:NFLX). It’s hard to really imagine Slack being more successful under Salesforce with Microsoft still in the picture, although bundling of products could be alluring to companies if Salesforce so chooses to do so. Still, with Teams at over 75 million daily active users and counting, Slack may not be seen as the dominant collaborative tool it once was thought to be, even with the extra muscle and brand power provided by a potential Salesforce buyout.
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