salesforce.com, Inc. (NYSE:CRM) has moved to strengthen its arsenal of tools that allow people to work from home due to COVID-19 disruptions. The company has inked a $27.7 billion cash and stock deal to acquire workplace software company Slack Technologies Inc. (NYSE:WORK)
Slack has been a sensation in the aftermath of the COVID-19 pandemic forcing people to work from home. Founded in 2010, the company has grown immensely owing to the ongoing digital transition. In the past, the company has attracted takeover bids from Alphabet Inc. (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN)
The company’s popularity has grown tremendously amid the COVID-19. Slack’s products allow people to communicate and collaborate. Likewise, its offerings and solutions should help Salesforce customers make the much needed digital transformation.
Under the terms of the deal, Slack shareholders are to get $27.69 in cash and 0.0776 shares of Salesforce stock for each Slack share held. Once the deal is complete, Salesforce intends to integrate Slack’s communication software into every aspect of its cloud software offerings.
The acquisition is Salesforce’s biggest deal since its inception 21 years ago. It affirms the company’s push for enterprise clients in need of cloud computing solutions. The hefty premium that Salesforce is paying affirms how competitive the software market has become.
Salesforce is acquiring Slack at a time when it is facing increasing competitive pressure from the likes of Microsoft Teams and Oracle. While the company did report a 39% increase in sales in the recent quarter, it was a drop from a 49% increase in the previous quarter. Management has already warned that it does not expect the robust revenue growth rate to continue.
Tech giants are increasingly eyeing companies offering tools that allow people to work from home as the new trend becomes the new norm. Adobe Inc. (NASDAQ: ADBE) has already confirmed plans to acquire workforce management service Workfrong for $1.5 billion. In July, Atlassian inked a deal to acquire Mandeville, a company that sells tools for developers and project management.
Given the consolidation wave in the sector, firms focused on workplace collaboration products remain potential acquisition targets. Some of the companies that could attract takeover bids include Airtable, Dropbox, and DocuSign.