Microsoft announced on Monday that they had reached an agreement to acquire LinkedIn for $26.2 billion in cash. According to the deal, the software giants will pay LinkedIn $196 per share, a 50 percent premium over LinkedIn’s closing price on Friday, in an all-cash transaction. This is inclusive of the professional networking site’s net cash. The deal sent LinkedIn’s shares soaring by 48 percent to $194.00 on the New York Stock Exchange, while Microsoft’s shares are down four percent.
Microsoft to acquire LinkedIn. https://t.co/ijfD6gZmiB pic.twitter.com/ChUbNT0eSX
— Microsoft (@Microsoft) June 13, 2016
The deal, which was unanimously approved by the board members of both LinkedIn and Microsoft, is expected to close by the end of 2016. It is still subject to a number of things, including an approval of LinkedIn shareholders, certain regulatory approvals, and other closing conditions. Reid Hoffman, chairman of LinkedIn’s board and its controlling shareholder, and CEO Jeff Weiner both stated that they were fully in favor of the deal.
“Today is a re-founding moment for LinkedIn” – Hoffman
“Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works.” – Weiner
Weiner further assured that, even after its acquisition by Microsoft, the world’s largest professional network will still be maintaining its “distinct brand, culture, and independence.” Weiner is set to continue his duties as CEO, and will be reporting directly to Microsoft CEO Satya Nadella. In a statement made to LinkedIn employees, Weiner said that Nadella’s vision to operate LinkedIn as a fully independent entity within Microsoft, a model used with great success by companies like YouTube, Instagram and WhatsApp, was a crucial factor in making the decision. He further added that “little is expected to change,” and employees will have the same titles and responsibilities.
Here’s our conversation with @satyanadella and @jeffweiner about the big acquisition: https://t.co/FcqG0N6g9Z
— Matt Rosoff (@MattRosoff) June 13, 2016
. @Microsoft & @LinkedIn : world’s leading professional cloud + world’s leading professional network https://t.co/63V90F77Wj
— Satya Nadella (@satyanadella) June 13, 2016
Nadella announced the news to Microsoft employees via email on Monday morning.
“This deal brings together the world’s leading professional cloud with the world’s leading professional network. I have been learning about LinkedIn for some time while also reflecting on how networks can truly differentiate cloud services. It’s clear to me that the LinkedIn team has grown a fantastic business and an impressive network of more than 433 million professionals.”
Nadella also shared his vision of combining LinkedIn with the Office Suite in the future so that the server can recognize what the user is trying to accomplish and then suggest specialized experts who can help them do it. He also believes that Microsoft could help LinkedIn boost its profits via targeted advertising and more “individual and organization subscriptions.”
Though LinkedIn has received some hefty premium for its shares following this deal, the shares are still selling for way less than what they were selling for in 2015, when they had hit a peak of more than $270 per share. By the beginning of this year, share prices were at a record low and there were concerns of the company stagnating. With this new deal, LinkedIn has definitely embraced some change, but the two companies have a huge challenge ahead of them in overcoming increased competition in the professional software market.
[Image via Shutterstock]
