Why Hasn't the Slack-Salesforce Deal Closed?

It's been more than six months since salesforce.com announced its intent to acquire Slack (WORK). Investors are probably wondering what's going on, especially since Slack shares have been in a holding pattern since the announcement. On a Fool Live episode recorded on May 26, Fool contributor Toby Bordelon explains where the deal is today and what investors should do if they are still holding Slack shares.

Toby Bordelon: Let's talk about Slack. This will be a little bit different, the way I'm going to talk about Slack because they have that acquisition by Salesforce that is in the works. Quite honestly, if you're a shareholder, I don't think you care about their earnings. I really don't think you care about the details of what's going on with the business as long as this still remains on track because that overshadows everything.

What's going on with that? Let's take a quick look at this as the deal. There's two things to point out here, stuff I've seen so far. Just last week, Australian regulators officially approved the deal. That was something that needed to happen. So that box is checked. The big win though, the big approval you need is the Justice Department in the United States. Where is that? Well, back in February, the issue was called the second request. This is not a super good sign, but it's not that unusual either for these big antitrust deals. What it basically means, essentially, is they want more time to think about it, and they want a little bit more information to dig into some of the details a little bit more closely.

When I was practicing as a lawyer, I worked on a few second requests. They're expensive. They take time and they are expensive to do. Think literally hundreds of lawyers in the country poring over documents to figure out what do you need to turn over to the government. This can take time. Now the thing here is, Slack, both these companies are saying, yeah, we still expect to close this deal at the end of July. But we're at the end of May and I haven't seen any big update on this, where the status of this is. I would not be shocked if this closing slips a little bit, and I don't think anyone should be concerned if that happens. It's just a function of these reviews can simply take a lot of time.

Theoretically, the government has a time limit, and once they have to make an analysis, but the reality is, if you're one of these companies and your choice is between giving the government an extension and having them just deny your deal or having to fight it out in court, you're going to let take all the time maybe. That's just the way these things work. We'll see.

I expect that as that end-of-July deadline approaches, we're going to get a little bit more information. If we don't get an approval, the company will say something that, take a little more time, but we expect to close now in the third quarter or something like that. We'll have to see. But don't worry too much that it seems to be dragging because this is fairly standard.

The big point I want every shareholder to remember, if you're still holding your shares, this is a cash-and-stock deal. What does that mean? I mean that if you do nothing and the deal closes, you become a Salesforce stockholder. Consider whether you want that to happen, and don't let it be by default. Don't just do nothing and magically have shares appear in your account and then figure out what you want to do with them. Make the decision before. Think about, do you want to own Salesforce? It's a good company. There's nothing wrong with it, but it's a very different company than Slack. I think you need to make that affirmative decision before the deal closes so you're not surprised, and then you have to figure out what you want to do.

Brian Withers: Thanks for that update, Toby. I had assumed this was just a no-brainer rubber-stamp approval. Given that the Justice Department approved Google and Fitbit, I would think that Slack and Salesforce would go through, but they can certainly take more time if they want.