Profit Pregame

Why I’ll Be Passing on The Salesforce/Slack Acquisition (And What I’m Buying Instead)

Another big merger is coming out of 2020…

The software sector is finally seeing its day.

What’s happening?

There’s no denying that the tech industry has seen some massive deals announced during 2020, including several deals in the tens of billions of dollars range. But there’s one subset of technology that hasn’t had the same luck, and that would be software.

But it looks like that could be changing soon, and it’s all thanks to one of tech’s biggest acquirers in recent years – Salesforce. Now, Salesforce is an American cloud-based software company. It provides customer relationship management services and sells a complementary suite of applications that focus on customer service, marketing automation, analytics, and application developments.

And now, the company is looking to expand its repertoire even further by acquiring Slack. This company has exploded with popularity thanks to the stay-at-home environment introduced by the pandemic.

Where’s the money?

Salesforce is expected to announce its deal with Slack today after markets close. And the deal is likely to be about half cash and half stock, the sources said and will price Slack at a premium to its current price. And this isn’t the first big deal Salesforce has made…

In fact, Salesforce has made several large acquisitions in recent years, including a $6.5 billion deal for MuleSoft in 2018 and its $15.3 billion deal with data visualization company Tableau. But the deal with Slack could become one of the largest software deals since IBM bought Red Hat in 2019.

And it’s for a good reason. Slack is a business communication platform. It offers many features, including persistent chat rooms, which can be organized by top, private groups, and direct messaging. So, I’m sure it comes as no surprise that this company has genuinely exploded over the pandemic as businesses moved to more work-from-home friendly ways to communicate.

But when it comes to this deal – here’s what I think you need to know…

How do I get some?

Slack and Salesforce are an exciting merger for the tech sector, no doubt. But with that said, there will always be mergers and acquisitions as companies are always looking at new companies with high growth potential.

So, Slack and Salesforce isn’t necessarily a deal I’ll be chasing. But that doesn’t mean you’ve missed out on some fast cash from a tech sector buy up. In fact, I expect more lucrative mergers to happen in many sectors, including cybersecurity and software – you just have to know which one is best for you.

And for me, FEYE is the takeover target that has caught my eye. Fireye is a cybersecurity company that provides hardware, software. And services to investigate cybersecurity attacks, protect against malicious software, and analyze IT security risks. And it’s been involved in

the detection and prevention of many major cyber attacks.

The company’s growth has been incredible, and I only expect it to continue as many businesses continue the work-from-home environment. So, I’ll be looking to invest in this company, setting myself up to profit off their next significant acquisition before it even hits the headlines.

In the spotlight: TikTok news is back…

A few months ago, investors were chasing the news surrounding TikTok like it was the only way to make money in the market. But now, as the deal still hangs in the air, many are wondering if the rush to buy the TikTok news was premature – and I have to agree. And this is precisely why we never rush to buy into the next breaking news story.

But with that said, TikTok has once again been given an extended deadline for the second time in less than a month. The Trump administration offered the popular video app’s Chinese owner, ByteDance, until December 4 to wrap up Oracle and Walmart’s proposed takeover deal.

Initially, President Trump set a November 12 deadline as the hard stop for ByteDance to sell TikTok; the date came and went leaving many confused over what the future of TikTok might be. Following this, the U.S. government extended the deadline by two weeks – giving ByteDance until November 27. But once again, that date came and went, so another extension was offered.

Now, truth be told, there’s no promise the deal will be signed or that another extension will be offered. So, as I’ve been saying since the beginning – I won’t be chasing the TikTok deal. But I’ll be sure to keep you updated on the progress of these negotiations.

The Virtual Work Revolution

Slack and Salesforce are just two examples of beneficiaries of the telework movement brought on by the pandemic.

While other industries have also seen boosts during this time, I’m tempted to agree with my colleague Shah Gilani that the move to a virtual office space might be the trend with the most profit potential for investors in the know.

Shah’s even identified the five companies he feels will grab the lion’s share of the wealth created by this enormous shift.

Click right here to read more.

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