Salesforce (NYSE:CRM) has confirmed the rumors that started swirling last week. Along with sharing its third-quarter 2021 results, Salesforce announced that it is buying Slack (NYSE:WORK) for $27.7 billion. What do you need to know about Slack stock with this landmark deal in mind?
Perhaps the biggest thing for investors to note right now is simply the magnitude of the deal. When rumors first broke, it was clear this could be one of the largest deals in the software industry. Now we know that it is the largest since International Business Machines (NYSE:IBM) snapped up Red Hat.
But beyond that, here are 13 other things for investors to know now:
- Rumors of the deal broke last week, sending WORK stock up more than 20% on Nov. 25.
- At the time, investors were excited that the deal would value Slack above its $17 billion market capitalization.
- Today, they learned the final deal price of $27.7 billion.
- This total sum will be a mixture of cash and stock.
- Importantly, Slack stock shareholders will receive $45.86 per share, including $26.79 in cash.
- This is a 55% premium to the WORK share price prior to the leaked rumors.
- Slack stock is slightly positive in after-hours trading, while CRM stock is down 3.7%.
- Moving forward, the two companies expect the deal to close in mid-2021.
- Additionally, Slack CEO Stewart Butterfield will continue to lead the company.
- Salesforce buying Slack is another move in its direction to expand its footprint into workplace collaboration and analytics.
- The company previously acquired Mulesoft for $6.5 billion in 2018 and Tableau for $15.3 billion in 2019.
- Coming in at nearly twice the total value of the Tableau deal, this is the largest acquisition that Salesforce has ever made.
- Lastly, investors should know that Slack has been increasingly relevant thanks to the novel coronavirus pandemic.
Why Salesforce Buying Slack Matters
So what do you really need to understand about Salesforce buying Slack? Perhaps Wedbush analyst Dan Ives has the best perspective. Ahead of official confirmation of the deal, he released a note with a price target on CRM stock of $300. That implies nearly 25% upside from its Dec. 1 closing price.
Additionally, the reasons behind his bullish target are worth paying attention to. Not only is Salesforce beefing up its portfolio, it is taking on a major rival head on. During the pandemic, much of the narrative has pitted Slack against Microsoft (NASDAQ:MSFT) thanks to its Teams offering. Now, Salesforce can better compete thanks to the Slack platform. As Ives points out, the company had already acquired Quip, further boosting the relevance of the Slack acquisition.
But as you view the deal, the pandemic should not be far from mind. Just as many analysts have predicted the permanency of working from home, workplace messaging is here to stay. While we may one day go back to a world filled with meetings, Zoom (NASDAQ:ZM) calls and Slack messages will continue to be a part of daily life. That bodes well for Salesforce as it announces it Slack acquisition.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.