Microsoft Corp. and LinkedIn Corporation entered into a definitive agreement under which Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash.
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The move comes with Microsoft moving away from being a pure software firm, and LinkedIn seeking ways to boost growth.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals”, Nadella said.
In a brief video interview posted along with Microsoft’s announcement today, Microsoft CEO Satya Nadella said combining his company’s strengths with LinkedIn’s is something he’s been thinking about for a long time.
LinkedIn will retain its distinct brand, culture and independence. Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction.
LinkedIn, which enables members to connect with similar-minded professionals and facilitates recruiting and job hunting, has carved out a social network with a distinct identity.
Microsoft said it would issue new debt to fund its acquisition.
But the company reported a loss of $46 million in the past quarter and a $166 million loss for 2015, which put its shares at multiyear lows early this year.
LinkedIn is the world’s largest professional network and contains a veritable goldmine of data, with recruiters paying thousands of pounds per month to gain access to its secrets.
The deal reflects Microsoft’s new focus on business services and cloud computing, Nadella said in an email to staff. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organisation on the planet”.
After the deal, which will require the approval from regulators in the USA, the EU, Canada and Brazil, LinkedIn will become part of Microsoft’s productivity and business processes unit.
Richard Windsor, analyst at Edison Investment Research said the value of the deal will depend on whether Microsoft can successfully marry the LinkedIn website with its existing software. “Social graph is key”, he said in a tweet, referring to the company’s Wall Street trading symbol.
But Roger Kay, analyst and consultant with Endpoint Technologies Associates, said it is doubtful Microsoft can use the deal to compete in a world of social networking dominated by Facebook.
“It doesn’t help at all competing with Facebook”, Mr Kay told AFP.
“Shares in professional networking/dating/narcissism website LinkedIn are called to open around 40 per cent higher at the United States open after confirmation it has welcomed a mammoth takeover approach from Microsoft constituting a nigh on 50 per cent premium over Friday’s share price close”, Eden said.
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“It seems extraordinarily expensive”, he said. “With this deal lightening Microsoft’s coffers to the tune of $26 billion, make that an exodus of biblical proportions”, he added.
