Salesforce agreed to acquire Slack

Salesforce agreed to buy Slack for $27.7 billion, combining two powerhouses in business software, which is the largest acquisition ever. Salesforce, whose core product helps sales teams manage their customers, has steadily expanded into new areas, including marketing services and data analytics.

Marc Benioff, Salesforce’s CEO and chairman, described his own dependence on Slack’s instant messaging service for the office during an earnings call after market close on Tuesday. “We see Slack as a once-in-a-generation platform and company. It’s the central nervous system of so many companies on this call,” he said.

Benioff further said Salesforce’s president, Bret Taylor, and Slack’s CEO, Stewart Butterfield, approached him with the idea for a deal. Their plan: to combine Slack with Salesforce’s Customer 360 product, a central hub for Salesforce’s software services, ranging from sales to marketing, he said.

“It’s a perfect match for us both,” Benioff said, calling the combo a business “supercharger.” Collaboration tools involving chat and video “are the next big moment for our industry,” Benioff added, comparing the occasion to the development of graphical user interfaces, or icon-laden computer screens, in an earlier computing era.

Taylor echoed Benioff’s enthusiasm on the call, describing Slack as “an operating system for the new way to work.” In a statement, Butterfield echoed the laudatory praises, saying the deal represented “the most strategic combination in the history of software.”

Analysts expect Salesforce’s move to spur competitors-from Microsoft and Google to Oracle and SAP-to make big moves of their own in the so-called cloud collaboration industry. Earlier this month Adobe bought work management firm Workfront for $1.5 billion.

There are plenty of other potential acquisition targets. Some include Asana, Box, and Dropbox.

Salesforce’s bold bet was compared by Aaron Levie, Box’s CEO to Facebook’s prescient acquisition of Instagram for roughly $1 billion in 2012 in terms of its industry-shaking significance. Salesforce “won’t blow it,” commented on Twitter, he commented.

The deal is expected to close midway through next year, regulatory approval pending, Salesforce said.