Salesforce, a pioneer in business software, will purchase Slack, a work dating service, for US$27.7 billion (approximately Rs. 2,034 billion), aiming to make the two companies better compete with the long-term industry giant Microsoft.
The acquisition announced on Tuesday is the largest acquisition in Salesforce’s 21-year history so far. The San Francisco-based company was one of the first companies to start selling software that can be used as a subscription service. The software can be used on any device connected to the Internet without having to install the program on a single computer.
Marc Benioff, the gorgeous founder and CEO of Salesforce, praised the “cloud computing” concept as the initial wave of the future.
But software as a service has become the industry standard and has become a gold mine for long-term software manufacturers. Microsoft has developed a prosperous suite of online services for itself, called Office 365, which includes a Teams chat service, which contains many of the same features as Slack’s 6-year-old application.
Slack filed a lawsuit in the European Union in July, accusing Microsoft of illegally bundling Teams into Office 365 to prevent customers who might prefer Slack from deleting it.
Microsoft has also been threatening Salesforce’s main product, a series of tools that help other companies manage their customer relationships.
“For Benioff, it’s all about Microsoft,” Wedbush Securities analyst Dan Ives said of Tuesday’s trading. “It is clear that Microsoft is moving away from Salesforce in the cloud computing war.”
Benioff undoubtedly believes that the deal is a major coup. After losing to Microsoft in 2016, both companies are bidding for the professional networking service LinkedIn.
Benioff said on an enthusiastic conference call: “This is a match made in heaven. We have seen a generation of companies and platforms in Slack. This is the central nervous system of many companies.”
Based on its success in recent years, Salesforce has been expanding into other areas, mainly through a series of acquisitions, including its largest previous transaction, which was acquired for $15.7 billion (approximately Rs 1,15,900 crore) last year. The data analysis expert Tableau Software.
Salesforce’s stock has provided funding for many transactions, and the stock’s market value has increased by almost seven times over a decade ago, thereby raising the company’s current market value to $220 billion (approximately Rs 1,154,400 crore). Salesforce used its stock to pay for about half of Slack’s purchase, and the rest was paid in cash, some of which was borrowed during periods of extremely low interest rates.
On the other hand, Slack has not been welcomed by investors, although the Slack service, which was publicly released in 2014, is being used by more and more companies and government agencies, which are looking for more flexible alternatives than email. . Before news reports of a potential deal with Salesforce surfaced last week, Slack’s stock was still hovering around its initial listing price of $26 (approximately Rs 1,900), while the company went public 18 months ago.
Forrester Research analyst Kate Leggett said: “This is an excellent exit strategy for Slack.” “The Microsoft team is eating Slack’s lunch.”
Slack co-founder Stewart Butterfield (Stewart Butterfield) hopes that this transaction will be better than when Flickr, another photo-sharing service he founded 15 years ago, was sold to Yahoo. After years of turmoil, Flickr lost its footsteps in the reshuffle of Yahoo, and finally sold it to SmugMug again in 2018.
In the next move after leaving Flickr, Butterfield decided to focus on games and founded a startup called Tiny Speck in 2009. A few years later, he turned to an instant messaging service whose name was “searchable logs and knowledge of all conversations.”
Leggett predicts that Salesforce will benefit from owning Slack because it will add popular collaboration tools to its own software suite, which focuses on managing customer relationships between businesses and government agencies. She said that the need for customer relationship agents and other Salesforce users to gather on a topic and collaborate remotely has only increased with the coronavirus pandemic, which has brought so many office workers home and attracted Many people use the new online tools.
If all goes well, Salesforce hopes to take control of Slack sometime between May and July next year.
Slack, which is free for people who use the basic version, is quickly adopted in the technology industry due to its ease of use and easier conversations compared to email. The company stopped publishing daily user numbers after breaking through 12 million users last year and instead focused on paying customers. Because of the way the pandemic forces people to work from home, Butterfield said in March that it has shown “a lot of interest.”
Ives said: “I think the pandemic played an important role in paving the way for this deal.” Zoom lens, casual pants, the Microsoft team will become a new member of the workforce. “
Ives said that Benioff has not had time to catch up with Microsoft, which is still the second participant in Salesforce’s core customer relationship management business (called CRM), but is providing More cloud-based services are far ahead.
Slack and Salesforce are headquartered in San Francisco, one block away. Slack’s office is located in the shadow of the 62-story Salesforce Tower, which is the tallest building in Northern California.
“I can look directly out of the window, do you know what I see? Laziness,” Benioff said.
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