Salesforce to Buy Slack, Prepare for Price Increases

Posted on 12/01/2020


CRM powerhouse Salesforce.com, Inc. signed a deal to buy Slack Technologies, Inc., an enterprise communications platform. Under the terms of the agreement, Slack shareholders will receive US$ 26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately US$ 27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020. According to Salesforce, Slack will be deeply integrated into every Salesforce Cloud. Starting in 2020, Slack had lost around 40% of its market value since it went public, making it a target for tech giants and tech PE firms. Six months ended July 31, 2020, Slack had a net loss of US$ 147,580,000.

The board of directors of each of Salesforce and Slack have approved the transaction and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement. The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022, subject to approval by the Slack stockholders, the receipt of required regulatory approvals and other customary closing conditions.

Salesforce has also entered into a voting agreement with certain stockholders of Slack common stock, under which each such stockholder has agreed to vote all of their Slack shares in favor of the transaction at the special meeting of Slack stockholders to be held in connection with the transaction, subject to certain terms and conditions. The Slack shares subject to the agreement represent approximately 55% of the current outstanding voting power of the Slack common stock.

Funding

Salesforce expects to fund the cash portion of the transaction consideration with a combination of new debt and cash on Salesforce’s balance sheet. Salesforce has obtained a commitment from Citigroup Global Markets Inc., Bank of America, N.A. and JPMorgan Chase Bank, N.A. for a US$ 10 billion senior unsecured 364-day bridge loan facility, subject to customary conditions.

Slack was founded in 2013.

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