Microsoft is buying the professional networking website LinkedIn for $US26 billion in cash, the biggest ever acquisition by the software giant.
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The move will see current Linkedin chief executive Jeff Weiner holding on to his post and reporting to Microsoft CEO Satya Nadella.
Now what: The two companies believe the acquisition will create new synergies and opportunities, including accelerating the growth of LinkedIn, Microsoft Office 365, and Dynamics.
The site has become a mainstay for millions of small business owners and entrepreneurs, who rely on it for professional networking, business development and use LinkedIn for employee recruitment.
Since the announcement, The LinkedIn stock price is up over 47%, above $192 per share.
Reid Hoffman, one of the co-founder of LinkedIn and the main brain behind the merger with Microsoft said that today is the special re-founding moment for LinkedIn.
The acquisition gives Microsoft an opportunity to solidify its foothold as the “the world’s leading professional cloud and network”.
The deal will see Microsoft paying 196 United States dollars per share (£138) for the social media website in an all-cash transaction funded by issuing new debt.
The number of LinkedIn members has grown 19 percent year over year to reach more than 433 million worldwide, according to the statement.
It expects the deal, which must be approved by regulators in the US, EU, Canada and Brazil, to generate annual savings of $150m by 2018.
The deal, the biggest in Microsoft’s history, is to bring together the world’s leading professional cloud with the world’s leading professional network, Microsoft said.
Microsoft plans to speed-up monetization of LinkedIn by growing individual and organization subscriptions as well as targeted advertising, it said.
With Dynamics CRM, Microsoft aims to transition salespeople from simply selling their products to more personalized social selling, a practice it will enable by connecting Dynamics CRM to LinkedIn Sales Navigator.
It will seek regulatory approval in the USA, the European Union, Canada and Brazil before closing the transaction.
One key objective of the deal is to expand Microsoft’s portfolio of software that reaches users at work, in a variety of different scenarios.
LinkedIn will remain an independently run unit of Microsoft.
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Microsoft shares are down $1.28 or 2.5% this morning at $50.20.
