Salesforce Confirms $ 27.7 Billion Deal to Buy Slack, As Results Exceed Street Estimates
Shares of Salesforce.com Inc. fell during the extended session on Tuesday after the cloud-based customer relationship management company confirmed it would acquire Slack Technologies Inc. as part of a deal. worth $ 27.7 billion and topped Wall Street estimates for the quarter.
shares fell more than 4% after-hours, after falling 1.8% in the regular session to close at $ 241.35.
The company has confirmed that it will purchase Slack WORK,
shareholders receiving $ 26.79 in cash and 0.0776 common share of Salesforce for each Slack share, for a combined total of $ 45.86 per share. Slack shares fluctuated between slight gains and losses after-hours, after rising 2.2% in the regular session to close at $ 43.84. Slack share is up 95% for the year and 44% since last Tuesday, when information about the deal surfaced.
On the earnings conference call, the question arose: If Salesforce and Slack already have a close relationship, why buy the company for almost $ 28 billion rather than team up?
“Overall, our transactions have been extremely successful,” said Marc Benioff, president and CEO of Salesforce, on the call.
Prior to Slack’s announcement, Tableau Software was Salesforce’s largest acquisition to date at $ 15.7 billion, closed in August 2019. This followed its $ 6.5 billion acquisition of Mulesoft back in 2018.
“When you look at what we’ve learned, our ability to integrate companies, to do one plus one equals three, we look at that and we say ‘Wow, this is a game changer and we know how to do it’, and we have already a lot of our old executives, for example, at Slack, so we know a lot of these players, ”said Benioff.
Salesforce’s acquisition of the corporate communications company, which went public in June 2019, is considered a “Major shot in the front” at Microsoft Corp. MSFT,
which has its competing Teams direct messaging service and already competes with Salesforce with its Dynamics 365 CRM service.
Salesforce said it would fund the cash portion of the deal with a combination of new debt and cash, noting that it had received a pledge from Citigroup, Bank of America and JP Morgan Chase for a $ 10 billion bridging loan. dollars over 364 days. Salesforce said it expects the acquisition to be finalized in its fiscal second quarter, which ends in July 2021.
Salesforce also reported third-quarter net income of $ 1.08 billion, or $ 1.15 per share, compared to a loss of $ 109 million, or 12 cents per share, in the period. last year. Adjusted earnings were $ 1.74 per share, up from 75 cents per share in the period last year. Revenue reached $ 5.42 billion, up from $ 4.51 billion in the quarter last year.
Analysts polled by FactSet estimated earnings of 75 cents per share on revenue of $ 5.23 billion, based on Salesforce forecast of 73 to 74 cents per share on revenue of 5.24 to 5.25 billion dollars in August.
Salesforce expects adjusted fourth-quarter earnings of 73 cents to 74 cents per share on revenues of $ 5.67 to $ 5.68 billion, while analysts expected 86 cents per share on revenues of $ 5. $ 51 billion. For fiscal 2022, Salesforce forecasts revenue of $ 5.68 billion to $ 5.72 billion for the first quarter and $ 25.45 to $ 25.55 billion for the year. Analysts forecast sales of $ 5.66 billion for the first quarter and $ 24.47 billion for the year.
In August, Salesforce’s second quarter results and outlook sparked its biggest stock gain in a day with a rally of 26% as quarterly revenues broke the $ 5 billion mark for the first time.
Additionally, Salesforce announced Tuesday that CFO Mark Hawkins will retire on February 1, with Amy Weaver, the company’s current chief legal officer, succeeding Hawkins.
As of Tuesday’s close, Salesforce stock was up 48% for the year, while ETF First Trust Cloud Computing SKYY,
is up 48%, the Dow Jones Industrial Average DJIA,
is up 4.5%, the S&P 500 SPX index,
is up 13%, and the Nasdaq COMP composite index,
is up 38%.