Shares of Slack Technologies (NYSE:WORK) have skyrocketed after a report that Salesforce (NYSE:CRM) is negotiating to buy the company. Citing sources familiar with the talks, The Wall Street Journal reports that any potential deal with Salesforce would probably value Slack at more than its previous $17 billion market capitalization.
After the WSJ's report, shares of Slack surged more than 20%, carrying the company's market cap up past $20 billion. Meanwhile, shares of Salesforce slumped by almost 3% on the news about Slack. Microsoft (NASDAQ:MSFT) shares also dipped slightly on the possibility of a combination of the two companies. Salesforce and Slack both compete with Microsoft, which previously considered acquiring Salesforce, although no agreement was reached.
Details On Talks Between Salesforce And Slack
If Salesforce reaches a deal to buy Slack Technologies, it would signal an even more aggressive push into office communication for Salesforce. The company already has two communication tools, which are Quip and Chatter. They can be used together with Salesforce's customer management tools.
The Wall Street Journal said the talks are still in the early stages, and an agreement is not guaranteed because the negotiations could fall through. Neither of the two companies was talking to the press about the report.
According to Business Insider, Salesforce CEO Marc Benioff said during the company's last earnings call in August that he didn't "really see an M&A environment." He also said they were more focused on integrating their other big acquisitions this year.
Acquisition Spree
If the acquisition is completed, it would be Salesforce's largest so far, according to CNBC. The company has been on an acquisition spree in recent years, snapping up growing companies by taking advantage of its own growing market cap.
Salesforce paid $6.5 billion to acquire MuleSoft in 2018, which was its biggest deal at the time. Then, last year, the company paid more than double that amount to acquire Tableau Software for $15.3 billion. This year, Salesforce has made some smaller acquisitions, including Vlocity for $1.3 billion in February and The CMO Club for an undisclosed sum in March.
If Salesforce does finalize an agreement with Slack, it would be one of the largest software deals ever. It would rank among IBM (NYSE:IBM)'s acquisition of Red Hat for $34 billion last year, Microsoft's purchase of LinkedIn (NYSE:LNKD) for $27 billion in 2016, and Facebook (NASDAQ:FB)'s acquisition of WhatsApp for $19 billion in 2014.
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