Table of Contents
The software company acquired the business organization platform despite the fact that it reported operating losses equivalent to 93% of its revenues.
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The American company Salesforce , dedicated to creating software for customer relationship management (CRM), bought Slack Technologies , the platform designed for organization and internal communication of companies. The transaction caused astonishment, as they paid $ 27.7 billion, more than the purchase of Instagram, WhatsApp or Skype cost , despite the huge losses that Slack records.
“It is a match made in heaven. Salesforce and Slack will shape the future of business software and transform the way everyone works in a fully digital world that works from anywhere , ”said Marc Benioff, president and CEO of Salesforce.
For his part, Stewart Butterfield, CEO and co-founder of Slack said that “this is the most strategic combination in the history of software and I can’t wait to get started.”
According to the conditions agreed for the transaction, which could be completed between May and July 2021, the amount is made up of cash and Salesforce shares. The software company plans to fund the cash portion by combining new debt and on-balance cash reserves. In this sense, the company indicated that it has obtained the commitment of Citigroup Global Markets, Bank of America and JPMorgan Chase Bank for the granting of a bridge loan of 10 billion dollars.
We’re thrilled to be acquiring Slack!
Combining @SlackHQ with # Customer360 will be transformative, creating the operating system for the new way to work. Together, we’ll enable companies to succeed in the all-digital, work-from-anywhere world.
Important: https://t.co/bRXZ1Iu1fj pic.twitter.com/xcPH5hRb6J
– Salesforce (@salesforce) December 1, 2020
Slack, a company with almost more losses than profits
According to its annual report , published last March, during the period between January 2019 and 2020, Slack had profits of $ 630.422 million.
However, operating losses amounted to 588.3 million, which represents 93% of its total revenues . Last year, operating losses accounted for 38.5% of revenue, a big difference compared to today.
Shares in Slack jumped 20% after the acquisition was announced, so maybe Salesforce’s move isn’t all that far-fetched.
More expensive than Instagram, WhatsApp or Skype
This is the largest purchase in Salesforce history. Last year, it acquired Tableau for nearly $ 14 billion in stock, after paying $ 6.5 billion for MuleSoft in 2018.
In 2011, Bill Gates bought Skype for 8.5 billion dollars . The quantity included the debt carried by the communication platform, which was around 1,000 million dollars.
Soon after, in 2012, Facebook paid $ 715 million for Instagram . The purchase, one of the most important in the technology industry, was outraged by the amount, but now it no longer seems so exorbitant.
Two years later, in 2014, Mark Zuckerberg joined his emporium with another application giant: WhatsApp. Facebook paid about $ 22 billion for the messaging app. Although the price was up $ 3 billion at the last minute, it is still less than the Salesforce-Slack transaction. The operation has meant losses for Zuckerberg since then, as it is difficult to make money with the app. Even so, it pays for Facebook to have the most used platform with the most users worldwide, which helps it to dominate the messaging app market as well.
Only time will tell if Salesforce’s investment in acquiring Slack is a success or not.