What happened

Shares of Slack (NYSE:WORK) have jumped by as much as 7% today on continued speculation that salesforce.com (NYSE:CRM) is preparing to announce a deal to acquire the enterprise collaboration specialist. Rumors of the acquisition first surfaced last week, sending shares soaring by nearly 40%. As of 11:30 a.m. EST, the stock was up 4%.

So what

CNBC reports that Salesforce is likely to formally announce the deal when it reports fiscal third-quarter earnings results on Tuesday after the market closes. The transaction is expected to be structured with roughly half cash and half stock, according to the report, while valuing Slack at a premium.

Slack app interface

Image source: Slack.

The swirling speculation has pushed Slack's market cap up to approximately $24.2 billion. That current valuation would make a Slack acquisition Salesforce's largest to date, topping the 2019 purchase of Tableau for $15.7 billion. Salesforce is a very acquisitive tech company and often likes to structure its larger deals with stock (Tableau was an all-stock transaction).

Now what

It's possible that the companies have already agreed on a price based on Slack's valuation prior to the speculation, which has increased its market cap significantly. Slack's market cap before the first rumors emerged was around $16.9 billion. If Salesforce is indeed planning to fund half the acquisition with cash, it may need to arrange some form of debt financing since it finished last quarter with $9.3 billion in cash on hand.

Buying Slack would intensify Salesforce's competition with Microsoft, which offers a rival Dynamics 365 customer relationship management (CRM) platform. Microsoft Teams has emerged as Slack's primary competitor.

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