That said, we think the price tag was steep at $28 billion in total and about $46 per share, based on deal terms of $26.79 in cash and 0.0776 shares of Salesforce common stock. Salesforce has done a nice job identifying strategic targets and smoothly integrating both products and operations, so we think they can do the same with Slack, which was characterized as an opportunistic deal. We have mixed feelings on the Slack acquisition. Stealing the thunder from fine results was the formal announcement that the company is acquiring Slack, and this dominated the earnings call. Meanwhile, wide-moat Salesforce reported strong results, including meaningful upside to both revenue and non-GAAP EPS, while guidance for the fourth quarter was mixed. We also see minimal risk to the deal being blocked by regulators. Given the significant premium to the $30 stock price of Slack before the deal was announced, we do not think there will be another bidder for the company.

Slack CEO Stewart Butterfield will continue to lead Slack once integrated into Salesforce. Salesforce will borrow $10 billion and issue new shares to finance the transaction, which is expected to close late in the second quarter. We think there is a near 100% probability of the deal being consummated. This new fair value estimate is equivalent to $26.79 per share in cash plus the value we assign to the fraction of Salesforce shares received, based on our $253 fair value estimate for Salesforce. We are raising our fair value estimate for Slack to $46 from $20. The premium is obviously compelling for Slack shareholders, compared with our standalone $20 fair value estimate for the firm and the $30 price where the stock was trading before rumors of the deal arose. Strategically, this would be a sound acquisition for Salesforce, as it would add serious direct exposure to collaboration and the remote work movement, large and rapidly growing markets that the company indirectly participates in, and would allow for yet another connection between Salesforce and its customers.

Investors will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each share of Slack. No-moat has agreed to be acquired by ( CRM) for approximately $28 billion.

Slack acquisition price