Enterprise communications platform, Slack Technologies, has agreed to be acquired by Salesforce.com in a $27.7 billion cash and stock deal. Salesforce shares dropped 4.8% in Tuesday’s after-market trading.
According to the terms of the agreement, Slack (WORK) shareholders “will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on Nov. 30, 2020.” The deal is anticipated to close by the end of July next year.
The deal is one of Salesforce’s (CRM) largest acquisitions and will provide the cloud-based software giant with a popular workplace-communications platform to help better compete with peers like Microsoft.
Salesforce’s CEO Marc Benioff said “Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world.” Slack’s CEO Stewart Butterfield commented “Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work. The opportunity we see together is massive.” (See WORK stock analysis on TipRanks)
On Nov. 27, D.A. Davidson analyst Rishi Jaluria maintained a Hold rating with a price target of $24 (45.3% downside potential) on Slack stock. The analyst said that the acquisition would “make sense” and that Salesforce can help grow Slack’s penetration.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 8 Buys, 7 Holds and 2 Sells. The average price target stands at $31.62 and implies downside potential of about 27.9% to current levels. Shares have gained by over 95% year-to-date.
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