- GeneralM&A
- February 17, 2021
- 4 minutes read
US DOJ Seeks More Info On Salesforce’s Slack Purchase
In December 2020, Salesforce reached a landmark deal to buy the workplace collaboration software company Slack for a whopping $27.7…
In December 2020, Salesforce reached a landmark deal to buy the workplace collaboration software company Slack for a whopping $27.7 billion, marking the company’s biggest-ever acquisition since its inception. Although agreed to, the Slack purchase hasn’t been completed, still subject to customary due diligence and regulatory approval.
Now, it appears that US regulators are gazing into Salesforce’s mega-deal to buy Slack with deeper eyes, with the United States Justice Department now demanding that both Salesforce and Slack provide “additional information and documentary material” related to their merger. The demand came from the Justice Department’s Antitrust division.
Demanding for additional information related to a business deal in what’s usually referred to as a “Second Request” isn’t out of the norm, but usually signals higher-than-normal scrutiny of a deal. Even, with a $27.7 billion acquisition on the table, it’s likely to be expected.
Salesforce and Slack have each said that they’ll comply with the request for additional information filed by the US Justice Department while still anticipating that Slack’s acquisition will be completed in the fiscal quarter ending July 31, 2021.
Salesforce is paying a price for Slack that sums up to over 30x Slack’s projected 2021 revenue of between $855 million to $870 million. The company is paying for Slack with both cash and stock, wherein the cash portion sums up to over $13 billion while the remaining will be paid with Salesforce stock.
Salesforce has secured a loan of $10 billion from a group of banks to finance the cash portion of Slack’s acquisition, and such implies that it’s really down to buy Slack in what counts as one of the biggest exits for a software company over the past decade.
Recently, Salesforce touted and praised remote work policies by declaring the “9-to-5 workday is dead” in a blog post. As it seems, the company has put its money where its mouth is by acquiring Slack with a picture in mind that the acceleration of remote work policies pushed up by the Covid-19 pandemic globally will reap good fortunes for enterprise collaboration software tools.
Salesforce’s Slack purchase will notably step up its rivalry with Microsoft, whose Microsoft Teams software is Slack’s main competitor globally.
