Should Investors Get Rid of Slack?

Workplace collaboration software company Slack (NYSE:WORK) is being acquired by (NYSE:CRM), so it may seem silly to hold the shares any longer. However, the cash-and-stock nature of the deal makes it a little more complicated. In this Fool Live video clip, recorded on Jan. 25, contributors Jason Hall and Brian Withers discuss whether investors should hold on or sell. 

Brian Withers: Slack. So, the biggest news for Slack is Salesforce put out a bid for them and they are trading at pretty close within like $1 or a $1.50 of the buyout price for Salesforce. Earnings don’t matter at this point [laughs] going forward, there’s really nothing to watch for Slack. If you’re wondering what the heck do I do to my shares, let me just explain how this is going to work. The Salesforce deal will close sometime they said in Q2, so it will be May, June, or July. Between now and then you’re going to get another dollar or dollar and half in the price, you’re going to get a cash payout at $26.79, I think, yeah, $26.79 plus 0.0776 shares of Salesforce. In my view, it’s not worth hanging around for this little teeny extra and to get a small smidgen of Salesforce shares. If you’re interested in Salesforce, just buy Salesforce rather than 7.76% of the Slack shares that you own.

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Jason Hall: I have one caveat to that. If you own in a taxable account and you need to get past that long-term gains rates or reduce your tax implication, I would suggest holding past that 12-month period to make sure that you reduce your tax implications. Also, if you are interested in owning Salesforce, wait till the transaction happens because you’re not realizing a gain and then buying the shares, you’ll be exchanging the shares so it reduces your taxes in total. That’s the only thing I would consider is the tax implications.

Withers: You could certainly use the cash payout to buy Salesforce shares as well. I think Slack as a Salesforce asset is going to be pretty exciting.

Hall: I think so too.

Withers: If you’re a Salesforce shareholder, it’s going to be pretty cool to see what they do with it. Maybe like Teams, they may even give it away, who knows. But I think it’ll bring even more folks to the Salesforce ecosystem.

Hall: Yeah, I agree with that. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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