Benioff ended up abandoning the approach for Twitter as ongoing discussions dragged the shares even lower. Slack looks like a more natural fit for his company than the social media firm, but the CEO is still, characteristically, asking for a lot of faith from investors. If the latter can swallow a high-looking price, then maybe that faith would be justified over the longer term.
If Salesforce were to pay a premium to Slack’s undisturbed share price of 30% (a fairly typical amount in M&A), it would value the messaging software maker at some $21 billion, including net cash. The snag is that Slack is not expected to generate any meaningful operating profit for years. So judged through the prism of returns on invested capital, payback from a deal would be many years off.
Indeed, Slack’s stock is already trading above the 30% premium level, indicating that the market expects a