Microsoft to buy LinkedIn for $26.2 billion.
$26.2 billion paid for networking site
Tech giant Microsoft said Monday that it had reached a deal to acquire professional social networking site LinkedIn for $26.2 billion in cash.
The deal values LinkedIn at $196 per share, representing a 49.5% premium over Friday’s closing price.
The companies said their respective boards had unanimously approved the deal. LinkedIn CEO Jeff Weiner will keep the title and report to Microsoft CEO Satya Nadella.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said in a statement. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
“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 said. “For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.”
The $26.2 billion deal would be Microsoft’s largest ever and the third-biggest merger or acquisition of 2016, according to Dealogic, behind the $32 billion merger in January of pharmaceutical companies Baxalta and Shire (SHP).
LinkedIn has about 430 million members and has sought to expand its workplace education offerings. It acquired online learning site Lynda.com last year for $1.5 billion. Three months ago, LinkedIn launched 50 online learning paths to help job seekers improve their skills.
“LinkedIn is a highly strategic suite of enterprise productivity tools and perhaps the go-to destination for B2B marketing on the internet,” said Scott Devitt, internet equity research director for investment banking firm Stifel. Devitt had a “buy” rating with a target price of $180 for LinkedIn in his most recent note to investors.
While Microsoft is paying a premium for LinkedIn, the software giant should gain from the acquisition, said Mizuho Securities analyst Neil Doshi. “This transaction makes sense to us. We’ve always considered two potential acquirers for LinkedIn — Salesforce or Microsoft,” he said in a note to investors Monday.
The deal increases Microsoft’s presence on social media, he said. “Microsoft has fallen behind in the consumer internet sector, and this deal gives Microsoft 433 million social LinkedIn members that is growing,” he said.
Meanwhile, LinkedIn can expand its recruiting, advertising and sales programs though Microsoft’s extensive business and consumer connections. Microsoft’s Outlook.com alone has 400 million active users and Microsoft Office has been downloaded 340 million times on Android and iOS devices, according to Microsoft. “We believe that LinkedIn can leverage Microsoft’s scale across all three solutions,” Doshi said. “In addition, LinkedIn can leverage Microsoft’s cloud infrastructure and engineering talent to become more aggressive in all three areas that it operates.”
Evidently, Nadella and Weiner have been brainstorming a collaboration for some time. In a video on Microsoft’s site, the two discuss how they might collaborate.
“I am a deep believer in productivity tools and communication tools because that is what empowers people to be able to be great at their job,” said Nadella, who said he is a LinkedIn user who publishes on the platform. “But think about taking that and connecting it with the professional network and really having that entirety of what is your professional life be enhanced, more empowered, where you are acquiring new skills and being more successful in your current job and finding a greater bigger next job. That’s that vision.”