Salesforce (CRM) Officially Closes Slack (WORK) Takeover, Analyst Optimistic Deal Will Create Meaningful Synergies Despite Monetization Concerns

July 21, 2021 11:24 AM EDT
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Salesforce (NYSE: CRM) has announced today it completed the takeover of Slack Technologies (NASDAQ: WORK). The two companies reported they had agreed to a $27.7 billion deal in late 2020.

"We couldn't be more excited to have Slack as part of the Salesforce family, combining the #1 CRM and the trailblazing digital platform for the work anywhere world. Together we'll define the future of enterprise software, creating the digital HQ that enables every organization to deliver customer and employee success from anywhere,” said Marc Benioff, Chair and CEO of Salesforce.

For Stewart Butterfield, Slack CEO and co-founder, a deal paves the way to utilize a “ once-in-a-generation opportunity to rethink and reshape how and where we work.”

"Salesforce and Slack are uniquely positioned to lead this historic shift to a digital-first world. I could not be more excited for what's to come,” he added.

Mizuho’s Gregg Moskowitz is “confident that CRM will drive legitimate synergies,” despite concerns about how well CRM will monetize Slack.

“Notwithstanding the aforementioned improvement in execution over the past three quarters, Slack is unequivocally better off as a part of CRM, in our view. WORK joining forces with CRM should not only result in greater integration and investment in the platform, but it should also enable CRM to actively cross-sell Slack and more pervasively bring remote enablement to its installed base of >200K customers. We also note that Slack's existing channel program is embryonic, and should benefit greatly from CRM's extensive channel relationships (particularly with systems integrators),” the analyst said in a note.

CRM is reiterated as one of the top picks over the NTM with a $290.00 price target at Mizuho.

“At the same time, Microsoft (MSFT, Buy) remains a formidable competitor, and essentially provides Microsoft Teams to its enterprise Office 365 / Microsoft 365 customers at little or no incremental expense. Net, it remains uncertain as to how well CRM will truly monetize Slack in the future, although we remain confident that CRM can drive legitimate synergies regardless,” Moskowitz concludes.

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Shares of closed at $240.11 yesterday.

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