![]() ![]() ![]() The purchase price sets a new high mark for fast-growing cloud software companies and highlights their scarcity value at a time when large parts of the economy are struggling, said Neeraj Agrawal, a partner at Battery Ventures. But he and other software analysts welcomed the strategic rationale for the deal, which gives Mr Benioff a new weapon against Microsoft while opening the way to selling Slack’s service through a much larger sales team. “The burden of proof is squarely on their shoulders to convince investors, when they said they wouldn’t be doing anything like this for a while,” said Mr Zukin. He added that “the market is very unusual this year”, forcing the company to re-evaluate as it tries to ramp up product development. Mr Taylor said the high premium Salesforce was paying was justified because the value of Slack to its customers had “dramatically increased over the course of the year” due to the pandemic. Marc Benioff, Salesforce chief executive, suggested in August that his company would avoid more deals due to high stock prices. Salesforce has earned a reputation for paying big premiums for acquisitions over the past two years, which has added to Wall Street's wariness and wiped some $28 billion from the company's value since news of talks with Slack emerged. SAP and Oracle have also turned to cloud dealmaking to accelerate the transformation of their traditional software businesses and keep up with the new buying habits. Microsoft and Salesforce have between them sealed six of the nine largest cloud software acquisitions, putting the two companies in the lead as access to digital services becomes a more common way for companies to buy technology. "Ultimately, it's about Microsoft - they have it all," he said. The union would provide an easier way for workers to tap into Salesforce's software and make it a stronger rival to Microsoft, said Alex Zukin, analyst at RBC Capital Markets. The combination brings together Slack's chat service, which reached more than 12m daily users last year, with Salesforce's wider range of sales, marketing and other business software. The deal is expected to close in the second quarter of 2022. Investors in Slack would receive $26.79 in cash and 0.0776 shares of Salesforce for each of their shares, the companies said in their announcement, indicating about a 55 per cent premium to the value of Slack shares before news of their talks emerged. The cash-and-stock deal is the largest in the soaring cloud software industry, beating Microsoft’s $26.2bn purchase of LinkedIn four years ago. Salesforce on Tuesday capped cloud computing's 2020 work-from-home boom with an announcement that it would pay $27.7 billion for workplace chat app Slack, setting up a battle with Microsoft for pole position in one of the tech market's hottest corners.
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