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Slack Technologies Inc Class A WORK

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Slack Taken Out by Salesforce; Surprise Quarterly Results Release All Good; FVE Up to $46 Deal Price

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

No-moat Slack has agreed to be acquired by Salesforce for approximately $28 billion. Investors will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each share of Slack. 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. 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. We are raising our fair value estimate for Slack to $46 from $20. 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 think there is a near 100% probability of the deal being consummated.

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Company Profile

Business Description

Slack Technologies operates Slack, a software-as-a-service platform that brings together people, applications, and data. The platform is appropriate for all business types, from small and medium-size businesses to enterprise customers. The company was founded in 2009 as a game developer but later changed its focus and released its internally developed toolset, Slack, in 2013. It is headquartered in San Francisco.

500 Howard Street
San Francisco, CA, 94105
T +1 415 630-7943
Sector Technology
Industry Software - Application
Most Recent Earnings Oct 31, 2020
Fiscal Year End Jan 31, 2021
Stock Type Speculative Growth
Employees 2,510