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Salesforce & Slack Merger Proposal Bags Japan Regulator’s Consent

Salesforce’s (CRM) acquisition of Slack Technologies (WORK) has been approved by the Japan Fair Trade Commission (JFTC) on the grounds that the deal is unlikely to result in substantially restraining competition in any particular field of trade.

Salesforce provides on-demand customer relationship management (CRM) software, while Slack offers a channel-based messaging platform to enable secure business communications.

The stock-cash merger deal worth about $27.7 billion was announced in December 2020. The deal is still awaiting shareholder approval and is anticipated to close in the second quarter of Fiscal 2022. (See Salesforce stock chart on TipRanks)

On June 29, Salesforce announced the pricing of an underwritten public offering of $8 billion of senior notes. It seeks to use the proceeds from these notes to fund the cash portion of the acquisition price.

On June 30, Evercore ISI analyst Kirk Materne assigned a Buy rating on the stock and raised the target price to $300 from $290. The new target price implies 20.9% upside potential from current levels.  

Materne noted that Salesforce’s opportunity to normalize spending in areas such as real estate and in-person events has been bolstered. The analyst is also of the opinion that there is potential for a ‘re-rate’ of Salesforce shares, based on margins and operating cash flow increasing slowly.

The rest of the Street is optimistic about the stock, with a Strong Buy consensus rating based on 22 Buys and 5 Holds. The average Salesforce price target of $278.27 implies 12.1% upside potential from current levels.

TipRanks data shows that financial blogger opinions are 91% Bullish on CRM, compared to the sector average of 68%.

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