Salesforce escalates Microsoft rivalry with £20.7bn Slack acquisition

Salesforce has agreed to buy workplace messaging platform Slack in a deal worth $27.7 billion (£20.7 billion), the largest acquisition in the cloud giant's history.

Under the terms of the deal, Slack will now operate as a Salesforce company, but it will still be led by CEO Stewart Butterfield.

The acquisition was first reported earlier this week but an official announcement came late on Tuesday, ahead of Salesforce's annual conference Dreamforce. It is one of the largest deals in recent years, falling just short of IBM's $34 billion takeover of Red Hat in 2019.

The two companies will form a unified platform for enterprise collaboration with Slack integrated into every Salesforce cloud. The communications service will also become the new interface for Salesforce 360 customers.

Salesforce CEO, Marc Benioff, called Slack one of the most beloved platforms in enterprise software history and said the acquisition was a "match made in heaven". In turn, Butterfield called it the "most strategic combination in the history of software".

Butterfield also pointed out that Salesforce "started the cloud revolution", referencing the company's early work selling software as a subscription service (SaaS). It is now the standard practice and a billion-dollar industry with companies like Microsoft dominating with its online Microsoft 365 suite.

Slack has endured a long rivalry with Microsoft and its competing Teams platform, which benefits from being bundled in with 365 subscriptions. There is a suggestion that joining Salesforce, a customer relationship management (CRM) software company with a large enterprise portfolio and customer base, will help push Slack further into that market and potentially level the playing field.

"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," Benioff said in a statement. "I'm thrilled to welcome Slack to the Salesforce Ohana once the transaction closes."

Microsoft has also wadded into competition with Salesforce by recently making CRM software a priority. Benioff previously said that his company was the world's fastest-growing enterprise software company while announcing plans to create 12,000 new jobs over the next year.