13 Jun 2016

Microsoft to buy LinkedIn for $26.2 billion in cash; ...LinkedIn shares jump 48%

Huge news today in the world of M&A in enterprise and social networking services: Microsoft has announced that it is acquiring LinkedIn, the social network for professionals with some 433 million users, for $26 billion, or $196 per share, in cash. The transaction has already been approved by both boards, but it must still get regulatory and other approvals.

If for some reason the deal does not go through, Microsoft will have to pay LinkedIn a $725 million termination fee, according to Microsoft’s SEC filing detailing the merger.

The $196/share offer is a big hike on its closing price from Friday, $131.08. (And in premarket trading, unsurprisingly, LinkedIn’s stock has nearly crept up 64% to reach the share price MSFT is paying. Microsoft’s price is down 4% to $49.66 in pre-market trading.)

LinkedIn is keeping its branding and product, and it will become a part of Microsoft’s productivity and business processes segment. LinkedIn’s CEO Jeff Weiner will report to Satya Nadella.

The acquisition is a big one for both sides.

For Microsoft, it’s bringing a key, missing piece into the company’s strategy to build out more services for enterprises, and give it a key way to compete against the likes of Salesforce.

Today, Microsoft is focused squarely on software (and some hardware by way of its very downsized phones business). But LinkedIn will give Microsoft a far bigger reach in terms of social networking services and professional content — developing the early signs of enterprise social networking that it kicked off with its acquisition of Yammer for $1.2 billion in 2012. LinkedIn’s wider social network, pegged as it is to groups of employees and employers, will give Microsoft a sales channel to sell more of its products, and will serve as a complement to those that it already offers for collaboration and communication.

Microsoft has never been a massively successful company when it comes to social networking — although it smartly invested in Facebook before it went public, and as we have reported before it was apparently interested at one point in trying to make a bid to buy Slack for $8 billion. LinkedIn’s social network will give it a significant foothold in this area.

LinkedIn is active in over 200 countries and has 105 million monthly active users, with 433 million registered overall. The company has some 60% of all traffic on mobile, and — thanks to some strong SEO — a crazy 45 billion quarterly page views. It’s also one of the biggest repositories of job listings, with some 7 million active listings currently. While some parts of LinkedIn’s business has stagnated, specifically with MAU growth (which is up only 9% on last year) latter is a growing business — up 101% on a year ago.

LinkedIn’s core business is based today around recruitment ads and, to a lesser extend, premium subscriptions for users. The recruitment business (termed “Talent Solutions”) accounted for $2 billion of the company’s $3 billion in revenues in 2015.


Credit: TechCrunch

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