Salesforce is in talks to acquire Slack, and a deal could be announced as soon as next week, according to a person familiar with the matter. Shares of Slack closed almost 38% higher Wednesday after the WSJ first reported that Salesforce held talks to buy the company. Salesforce, whose stock closed down 5% on Wednesday, is scheduled to release its fiscal third-quarter earnings next week.

It is unclear how much the deal would be worth. Slack’s market cap ballooned to more than $20 billion following the WSJ’s original report. Salesforce has been on an acquisition spree, taking advantage of its market cap growth in recent years to buy growing companies. It acquired MuleSoft for $6.5 billion in 2018, the company’s biggest deal ever at the time, to help connect cloud applications. The following year it spent more than twice that amount on Tableau, acquiring the data visualization company for $15.3 billion.

Slack would be one of the biggest software deals ever for the industry. It would rank among IBM’s $34 billion purchase of Red Hat in 2019, Microsoft’s $27 billion purchase of LinkedIn in 2016 and Facebook’s $19 billion purchase of WhatsApp in 2014. “This would be a game changer move for Benioff & Co. to further build out its collaboration engine and product footprint as cloud spending ramps across the enterprise,” Wedbush Securities’ Dan Ives told CNBC, referring to Salesforce CEO Marc Benioff.

“This deal would be a major shot across the bow at Microsoft with the company’s Teams offering a direct messaging competitor against Slack that has been a clear hurdle to growth and now would be a two horse race between Microsoft and Salesforce,” Wedbush analyst Dan Ives said in a note to investors. “For Microsoft this would competitively change the landscape and make Salesforce even that much more of a competitor.”

Ives added that a deal between Slack and Salesforce could set the stage for more merger and acquisition activity in the cloud software space in 2021.

Todd Horwitz Chief Strategist
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Futures and Commodities with Andy Hecht and Technomental: Our webinar on Saturday was fantastic, here is the recording

2020-11-07 Techno Mental Futures and ETF Recording