© Reuters. FILE PHOTO: The company logo for Salesforce.com is displayed on the Salesforce Tower in New York
By Greg Roumeliotis and Krystal Hu
NEW YORK (Reuters) – Cloud-based software company Salesforce.com Inc (NYSE:) has approached workplace messaging app Slack Technologies (NYSE:) Inc with an acquisition offer as it seeks to expand its offerings to businesses, people familiar with the matter said on Wednesday.
Salesforce’s bid comes as Slack struggles to fully capitalize on the switch to remote working during the COVID-19 pandemic in the face of fierce competition from Microsoft Corp (NASDAQ:)’s Teams and other workplace apps
Slack shares ended trading on Tuesday at $29.57, well below the $42 high they reached on their first day of trading last year.
Salesforce sees the potential acquisition as a logical extension of its enterprise offerings, the sources said, adding that no deal was certain.
It was not immediately clear how receptive Slack was to a deal, and if other potential suitors, such as Oracle Corp (NYSE:), would come out of the woodwork
Slack, Salesforce and Oracle did not respond to requests for comment.
Slack Technologies shares jumped 24% to $36.58, giving the company a market capitalization of $21 billion, while Salesforce fell 2.7% after the Wall Street Journal first reported that the two companies had held deal talks.
Slack has benefited from companies relying more on information technology systems to keep their workers connected during the pandemic.
Its app has been installed about 12.6 million times so far this year, up approximately 50% from the same period in 2019, according to analytics firm Sensor Tower.
But the economic fallout of the virus outbreak has forced Slack to give discount and payment concessions to many of its customers who have had to make cost cuts.
Seeking to save money, some companies have also been switching to Teams, which comes with many of Microsoft’s office software packages.
Slack’s billing growth, a key indicator of future revenue, slowed in the three months to the end of July.
Salesforce meanwhile has been thriving financially during the pandemic. It raised its annual revenue forecast in August as the pandemic spurred demand for its online business software that supports remote work and commerce.
Salesforce has been beefing up its cloud business through acquisitions and had spent more than $16 billion last year to fend off competition from rivals such as Oracle Corp and German competitor SAP.
(Reporting Greg Roumeliotis and Krystal Hu in New York; Additional reporting by Subrat Patnaik and Eva Mathews in Bengaluru; Editing by Arun Koyyur and Jan Harvey)
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