Message Startup Slack Said to Draw Interest From Amazon

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Slack co-founder and CEO Stewart Butterfield.
Slack co-founder and CEO Stewart Butterfield. Credit: Bloomberg News

Corporate chatroom startup Slack Technologies has received recent inquiries about a potential takeover from technology companies including Amazon, people with knowledge of the situation said, a deal that would be the internet-commerce giant's biggest ever.

San Francisco-based Slack could be valued at at least $9 billion in a sale, the people said. An agreement isn't assured and discussions may not go further, said the people, who asked not to be identified because the matter is private.

Buying Slack would help Seattle-based Amazon bolster its enterprise services as it seeks to compete with rivals like Microsoft and Alphabet Inc.'s Google. The company's cloud-hosting unit, Amazon Web Services, in February unveiled a paid-for video and audio conferencing service -- Amazon Chime -- that lets users chat and share content.

Representatives for and Slack declined to comment.

Amazon's biggest acquisition to date came in 2014, when it agreed to buy video-game service Twitch Interactive Inc. for $970 million in cash to bolster its entertainment offering, according to data compiled by Bloomberg. The Seattle-based company had about $21.5 billion of cash and equivalents at the end of March, the data show.

Prime, Echo
Amazon has been expanding beyond its e-commerce platform, experimenting with food delivery and physical stores and dominating the cloud-storage business. Its $99-a-year Amazon Prime subscription, which includes delivery discounts, music and video streaming and photo storage, keeps shoppers engaged with the website. Echo, the company's voice controlled speaker, embeds Amazon even further in people's lives by making it easy to order from the website or even from a pizza delivery company.

The launch of Chime put it in direct competition with Microsoft's Skype and Cisco Systems's WebEx service in providing conferencing to corporate clients. The service was added to an increasing roster of AWS products, including security systems, a business intelligence service named Quicksight and hardware to allow customers to securely transfer large amounts of data -- all aimed at business clients.

Redmond, Washington-based Microsoft had considered acquiring Slack, people familiar with that matter said last year, but the discussions never got serious enough to involve CEO Satya Nadella or the company's board. Microsoft opted instead to build its own similar software.

Slack raised $200 million in its latest funding round in 2016, led by Thrive Capital Management, valuing it at $3.8 billion. The company, which introduced its business chat software in 2013, has recently turned its eye to bigger users. In January, Slack debuted an enterprise version of its chat software that allows tens of thousands of employees to collaborate across teams at major corporations like International Business Machines Corp.

Other backers include GGV Capital, Comcast Ventures LLC, Accel Partners, Social Capital, Spark Growth and Index Ventures.

Slack's Canadian born co-founder and Chief Executive Officer, Stewart Butterfield, said last month in a Bloomberg TV interview that an IPO "would be years away," citing some unpredictability as the business continues to grow quickly.

The company has about 800 employees across seven offices, including one recently opened in London. Slack has 5 million daily active users -- 1.5 million of whom pay to use the service -- and had $150 million in annual recurring revenue as of Jan. 31.

-- Bloomberg News

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