Is Salesforce Paying Too Much for Slack?

Salesforce (CRM -0.18%) recently agreed to purchase workplace collaboration platform Slack (WORK) in a $27.7 billion deal, making it the company's largest acquisition yet. While there are certainly arguments to be made that Slack is an excellent complement to Salesforce's product suite, there are many analysts and investors who believe the price tag of this cash-and-stock deal is too high. 

In this Nov. 30 Fool Live video clip, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss whether Slack could be worth the high price Salesforce is paying, and if shareholders should be disappointed the company is no longer going to be an independent operation. 

Matt Frankel: We don't know if they're paying too much. We've talked about this before on the show, when it comes to any acquisition, the question is not what the company is worth, the question is, what does the company worth as a part of its acquirer? Is Slack worth $25 billion as it is right now? No. Is Slack worth $25 billion as part of Salesforce's platform? Maybe. That's the question. We'll see what they're actually paying. Like I said, it looks like it's about half-and-half cash and stock.

Jason Moser: Yeah.

Matt Frankel: We'll see how they're actually structuring the deal and how much Slack shareholders like me are actually going to get for it.

Jason Moser: Yeah. I mean, we were on MarketFoolery earlier. I was on MarketFoolery earlier today with Chris. I'm not a Slack shareholder. I've always been not all that impressed with the platform. I mean, I think it's OK as a messaging platform, but I've never really found it to be that productive of a work tool beyond that. That's always been my perception at least, and then having the opportunity to work with Microsoft (MSFT 0.37%) Teams actually use that product. I mean, this is just an opinion. To me, Microsoft Teams was a far better experience, far more useful, far more productive, and just far easier to use. Now that doesn't mean anything at the end of the day. I mean, it just is what it is. But I do remember, if you look back to October of 2019, Slack had reported something in the neighborhood of I think 12 million daily active users. Then sometimes shortly after that, they had said we're going to stop reporting that number because that's not really the metric that matters for us and they were talking more about engagement and stuff like that. Whether that works or not is not really the point. But in regard to the Microsoft point of ages question, I do think this is something to give Slack at least a better chance at competing with Microsoft. I think a lot of that is going to have to do with Salesforce's expertise and the size of their network to this point. Salesforce is a far more successful business. It's been around for a lot longer, and I would put Benioff up there with some of the best CEOs out there for a number of reasons. I don't know. For me, I feel like this is probably the best result for Slack shareholders. Maybe I'm wrong, but I don't know. They had guided revenue growth down to 32 percent this current quarter from 60 percent a year ago. They're facing a very well undoubted competitor in Microsoft with all the capital in the world, tremendous user base. Slack was talking about taking Microsoft's quarter or maybe they had gone ahead and filed something in regards to antitrust, saying they were competing unfairly. It seemed like there are a lot of headlines there for Slack on its own. I think honestly this would be a good thing for Slack and being able to plug into Salesforce's network and maybe benefiting from some of their expertise. But yeah, I guess we'll learn a lot more and more I'm sure.

Matt Frankel: There are some companies in my portfolio that I would be upset if they were bought out. Like Square (SQ -1.57%), I want that growth story to play out on its own and a lot of these fintechs. But with Slack, as a shareholder, I'm not upset about it. Assuming even if today's value holds, I feel like I'm getting a fair price. I mean, it's a win-win for shareholders and for Slack as a company, so I'm not upset. I guess there are companies I would be upset if they were bought out, but this isn't one of them.