The icon for the chat service app Slack
Chris Ratcliffe/Bloomberg
Shares of Slack Technologies rocketed more than 21% in trading Wednesday following a report that Salesforce.com has recently been in talks to buy the workplace messaging app.
Any deal for Slack (ticker: WORK) would value the company at more than its current $17 billion market capitalization, The Wall Street Journal reported, citing people familiar with the matter.
The Journal said that some of the people indicated that a deal could be reached within days, but added that there was no guarantee the discussions would lead to a transaction.
An acquisition of Slack would be the largest by San Francisco-based Salesforce (CRM) since its $15.7 billion buy of Tableau Software in 2019.
If successful, a deal would be a “major shot across the bow” at Microsoft (MSFT), which has a competitor product with Teams, Daniel Ives, a managing director and senior equity research analyst at Wedbush Securities, said in a note.
“For Microsoft this would competitively change the landscape and make Salesforce even that much more of a competitor… in the field, as these two stalwarts further compete in the trillion dollar cloud opportunity over the next decade,” Ives said.
Following the Journal’s report, Slack’s surged $6.20, to $35.77, in afternoon trading Wednesday, while shares of Salesforce dipped nearly 4%, or $9.38, to $251.65.
Salesforce, which has a market cap of $225 billion, is scheduled to report its third-quarter earnings on Tuesday.
Slack has been one of the beneficiaries of working from home amid the restrictions caused by the Covid-19 pandemic. Its stock is up 63% so far this year. The company has more than $1.5 billion in cash on hand, and about $846 million in debt, according S&P Capital IQ. A premium of 15% or so would bring the value of a deal to $20 billion or more.
Word of a possible sale comes more than a year since Slack went public. The company, also based in San Francisco, began trading on the New York Stock Exchange in June 2019. Slack used a direct listing, meaning its shares were just listed and no money was raised in going public.
The software landscape is ripe for major mergers, Ives said. If Salesforce does buy Slack, such a transaction would “set off a chain reaction for more cloud software deals in 2021 despite the run-up in valuations over the past nine months,” he said.
Salesforce and Slack did not return messages for comment.
Write to Luisa Beltran at [email protected]
