Slack stock spikes on reports of Salesforce deal

New York(CNN Business) Slack shares shot up as much as 28% Wednesday, despite being halted twice for volatility, following a report that Salesforce has been in talks to acquire the workplace messaging app. Salesforce shares were down more than 4% on the news.

The talks were first reported by the Wall Street Journal.

Any deal would likely value Slack at more than its market capitalization of $17 billion earlier Wednesday, according to the Journal. The report also notes that there is no guarantee the talks will lead to a deal. As of Wednesday afternoon, Slack's stock price reached more than $36 and its market cap grew to nearly $21 billion.

Neither Slack (WORK) nor Salesforce (CRM) immediately responded to requests for comment.

Slack is a workplace communications tool that has long been popular among tech companies, media firms and retailers — it is used by Amazon (AMZN), IBM (IBM), TD Ameritrade (AMTD) and others (including CNN).

The pandemic has accelerated Slack's growth as many companies scramble to manage remote teams. Slack's stock is up more than 59% since the start of 2020. In its most recent quarterly earnings report in September, the company said it had more than 130,000 paid customers, up 30% year-over-year.

The company does, however, face steep competition in the remote collaboration space, including from Microsoft (MSFT). And it has not yet turned a profit since its initial public offering last year.

A Salesforce acquisition of Slack could be a sensible combination. Like Slack, Salesforce is also a software company that aims to improve business operations. It sells cloud-based customer relationship management software, as well as other enterprise applications for services such as marketing and data analytics.

A deal to buy Slack would likely mark Salesforce's largest acquisition ever. Salesforce last year acquired data analytics firm Tableau Software for $15.7 billion, in a bid to help companies better visualize and make use of their data. In 2018, it bought Mulesoft, a software company that helps link different systems together, for $6.5 billion.

"This deal would be a major shot across the bow at Microsoft with the company's Teams offering a direct messaging competitor against Slack that has been a clear hurdle to growth and now would be a two horse race between Microsoft and Salesforce," Wedbush analyst Dan Ives said in a note to investors. "For Microsoft this would competitively change the landscape and make Salesforce even that much more of a competitor."

Ives added that a deal between Slack and Salesforce could set the stage for more merger and acquisition activity in the cloud software space in 2021.