Amazon may purchase Slack Technologies in its biggest acquisition ever, with the cloud-based collaboration service being valued at no less than $9 billion in a potential sale, industry sources said earlier this week. The Seattle, Washington-based tech giant is reportedly holding talks about a potential acquisition with Slack’s top management, though the deal itself isn’t certain, insiders revealed, without disclosing more details on the matter. According to latest reports, Amazon isn’t the only suitor showing interest in taking over the Vancouver, Canada-based company, though the other rumored party that’s also understood to be a tech firm is reportedly close to dropping out of the pursuit due to the fact that Slack is still reluctant to sell.
It’s currently unclear whether the company isn’t giving more clear signals that it’s willing to greenlight a potential sale in an effort to obtain more leverage or if the possibility of an acquisition still hasn’t been determined by its top management, though Amazon’s previous M&A practices indicate that the matter likely won’t be drawn out. The largest e-commerce firm on the planet recently launched a competitor to Slack in the form of Amazon Chime, an Amazon Web Services-powered solution for conference calls and file sharing that isn’t a full-featured collaboration platform but shows signs of becoming one in the future. The hypothetical deal would be largely or completely negotiated in stock, with even the most conservative valuations of Slack surpassing Amazon’s cash reserves that are small relative to the company of its size; its current market cap amounts to over $475 billion, yet Amazon’s reserves only reached around $3.5 billion last year. This state of affairs is a result of an aggressive investment strategy that the firm founded by Jeff Bezos pursued for over two decades now, growing in a rather significant manner as a direct result of that approach.
Slack’s supposed reluctance to agree to a sale may be related to an upcoming funding round that the company is said to be planning with the goal of raising $500 million at a valuation of $5 billion. The sale and another major funding round are mutually exclusive, industry sources said, though it’s unclear when Slack will decide for one option over the other. If Amazon ends up purchasing the Canadian collaboration service, it will likely pay around ten times more than it did for its largest acquisition to date — Twitch Interactive — that cost the company $970 million in cash in the summer of 2014.