Richard Windsor, an analyst at Edison Investment Research, questioned the $26.3 billion price tag, but said it could be worth it if the integration of LinkedIn into Microsoft is done well.
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The takeover deal, which values each LinkedIn member at €53, saw shares of Microsoft fall as investors show concern over such a large outlay of cash for an online networking site.
According to BBC, the software giant said that LinkedIn would retain its “distinct brand, culture and independence”. Jeff Weiner will remain the CEO of professional social network and will report to Microsoft CEO Satya Nadella. Reid Hoffman, chairman of the Board, co-founder and controlling shareholder of the company, and Weiner both fully support this transaction.
“Essentially, we’re both trying to do the same thing but coming at it from two different places: For LinkedIn, it’s the professional network, and for Microsoft, the professional cloud”, the email reads.
Nadella told Yahoo News today that the acquisition of LinkedIn satisfies three key issues he considers when looking at the purchase of another company: it helps Microsoft expand its market; it enables the company to join a trend that increases engagement with users; and provides an opportunity for Microsoft to “uniquely differentiate” its business.
“This deal is the next step forward for Office 365 and Dynamics as they connect to the world’s largest and most valuable professional network”. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics”.
While the price tag raised a few eyebrows, there is no denying that LinkedIn is a massive buy for Microsoft with its more than 433 million members, 105 million unique visitors every month, and over 7 million active job listings on their site.
Microsoft, by contrast, is paying for the deal in cash.
“When Satya first proposed the idea of acquiring LinkedIn, he said it was absolutely essential that we had alignment on two things: goal and structure”, Weiner added in his letter to employees.
The acquisition “gives Microsoft a great way to keep a pulse on what business users are doing on the web and how they may use certain tools and products”, he added.
Microsoft bought Skype in 2011 and Nokia in 2013.
“The acquisition makes sense in respect of Microsoft’s link with enterprise in its cloud platform and portfolio of enterprise business services, it will help Microsoft build out its enterprise services capabilities”, said Mark Skilton of the Warwick Business School.
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The company paid a premium of nearly 50 per cent of Friday’s closing share price, paying $196 for each share.
