How an­a­lysts view LinkedIn af­ter the Mi­crosoft bid

Financial Mirror (Cyprus) - - FRONT PAGE - By Paul Au­sick

Mi­crosoft Corp. an­nounced early on Monday morn­ing that it would ac­quire LinkedIn Corp. The deal is an all-cash trans­ac­tion val­ued at $26.2 bil­lion, in­clu­sive of LinkedIn’s net cash. LinkedIn share­hold­ers will re­ceive com­pen­sa­tion of $196 per share in the deal.

This trans­ac­tion rep­re­sents a 49.5% premium to LinkedIn’s clos­ing price of $131.08 on Fri­day. What needs to be con­sid­ered here is be­yond just the so­cial me­dia as­pect.

Af­ter the dust set­tled from the an­nounce­ment, an­a­lysts piled into this mas­sive deal is­su­ing new calls. 24/7 Wall St. put to­gether a mon­tage of what an­a­lysts are say­ing about LinkedIn.

The ac­qui­si­tion is ex­pected to have min­i­mal di­lu­tion of roughly 1% to Mi­crosoft’s earn­ings per share (EPS) for the re­main­der of fis­cal year 2017 post-clos­ing and for fis­cal year 2018. Mi­crosoft ex­pects that it will be­come ac­cre­tive to its EPS in fis­cal year 2019 (or less than two years af­ter clos­ing).

LinkedIn will re­tain its own brand, as well as its own cul­ture and independence. Jeff Weiner will re­main CEO of LinkedIn, and he will re­port to Mi­crosoft CEO Satya Nadella. An­other win here, which was of course manda­tory, is that Reid Hoff­man, who is LinkedIn’s chair­man of the board (as well as co-founder and con­trol­ling share­holder), fully sup­ports the merger.

What will hap­pen is that the top so­cial me­dia site for pro­fes­sion­als will merge with the pro­fes­sional cloud af­ter LinkedIn launches a new ver­sion of its mo­bile app tar­geted in­creased mem­ber en­gage­ment. As far as what else Mi­crosoft will get, the ef­fort is said to en­hance the LinkedIn news­feed to de­liver bet­ter busi­ness in­sights. The LinkedIn ac­qui­si­tion of the on­line learn­ing plat­form called Lynda.com was also ref­er­enced. LinkedIn also rolled out a new ver­sion of its Re­cruiter prod­uct to en­ter­prise cus­tomers.

Monday’s press re­lease showed the fol­low­ing year-over-year growth met­rics for LinkedIn:

- 19% growth to more than 433 mil­lion mem­bers world­wide

- 9% growth to more than 105 mil­lion monthly unique vis­it­ing mem­bers - 49% growth to 60% mo­bile us­age - 34% growth to more than 45 quar­terly mem­ber page views

- 101% growth to more than 7 mil­lion ac­tive job list­ings

The trans­ac­tion has been unan­i­mously ap­proved by the boards of di­rec­tors of both LinkedIn and Mi­crosoft. The deal is ex­pected to close this cal­en­dar year and is sub­ject to ap­proval by LinkedIn’s share­hold­ers, al­though this premium and a tight con­trol should lead the deal to close with­out much in­ter­rup­tion. Also noted in or­der to close

bil­lion were the ap­provals con­di­tions.

Sev­eral an­a­lysts weighed in on LinkedIn fol­low­ing the an­nounce­ment:

Argus down­graded the stock rat­ing.

BMO has a Mar­ket Per­form raised price tar­get to $196.

Can­tor down­graded shares Buy. First Anal­y­sis has an Equal Weight rat­ing. Gold­man Sachs down­graded it to Neu­tral from Buy and raised its price tar­get to $203.

Jef­feries down­graded it to Hold from Buy and raised its price tar­get to $196 from $180.

MKM raised its price tar­get price to $196 sat­is­fac­tion and other of cer­tain reg­u­la­tory

cus­tom­ary clos­ing

to a Hold

rat­ing and

to Hold from from $130. Need­ham down­graded it to a Hold rat­ing. Piper Jaf­fray down­graded it to Neu­tral and raised its price tar­get to $196 from $180.

SunTrust Robin­son raised its price tar­get to $196 from $155.

Wed­bush has a Neu­tral rat­ing and raised its price tar­get to $196 from $140.

Wells Fargo down­graded it to a Mar­ket Per­form rat­ing.

Shares of LinkedIn were trad­ing at $191.82 on Tues­day, with a con­sen­sus an­a­lyst price tar­get of $176.72 and a 52-week trad­ing range of $98.25 to $258.39.

Mi­crosoft was trad­ing at $49.85. The con­sen­sus price tar­get is $57.79, and the 52week range is $39.72 to $56.85.

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