The acquisition had been widely anticipated after word of talks between the companies first surfaced last week. It will combine Slack, a highly visible messaging platform with Salesforce, which makes productivity tools used by companies to improve sales and services.
Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, Salesforce said in a statement.
"This is a match made in heaven," said Marc Benioff, Chair and CEO of Salesforce, in the statement. "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. "
Wedbush analysts Daniel Ives and Strecker Backe said in a note that keeping pace with Microsoft was at the heart of the deal. "Slack despite facing stiff competition from Microsoft has been a clearly successful solution set further penetrating enterprises and thus looks like the natural fit for Salesforce to beef up its collaboration and messaging footprint and keep pace with Nadella & Co. [Microsoft] with its cloud dominance," the analysts said.
The coronavirus pandemic has seen a surge in productivity application use as millions of employees have been forced to work online from home since early this year. While hopes for a vaccine against Covid-19, the disease caused by the virus, have been on the upswing, it will still take many months before enough people can be vaccinated to slow the spread of the virus and allow a return to normal work patterns. Even then, many companies are expected to continue to allow employees to work from home in a likely permanent shift of employment routines.
Salesforce shares fell $10.36, or 4.3%, to $231.25 in after-hours trading. The company separately reported better-than-expected results for the latest quarter.
Slack shares fell 34 cents, or 0.8%, to $43.50 in after-hours trading.
The stock has risen sharply since last Wednesday when talk of the takeover first surfaced.
Microsoft is a holding in Jim Cramer's Action Alerts PLUS member club.