USA TODAY International Edition
A MEETING OF MINDS
$ 26B cash deal is software giant’s biggest acquisition yet — ‘ a data play’ to retool offices
In a match made for the cloud, software giant Microsoft is acquiring professional social networking site LinkedIn for $ 26.2 billion in cash.
By teaming up, the companies aim to connect Microsoft’s more than 1.2 billion users of Office — and its other cloud- based offerings — with LinkedIn’s 433 million- plus mobile- friendly members in ways that transform the workplace.
LinkedIn’s news feed will be smarter: Your Microsoft Office calendar will know what’s coming up on your schedule, said Microsoft CEO Satya Nadella. And the Office software suite will have LinkedIn’s training courses on programs such as Excel, Word and PowerPoint baked in, he said.
Nadella foresees Microsoft’s artificial intelligence assistant, Cortana, serving as a networking caddy. “Imagine you are walking into a meeting and Cortana now wakes up and tells you about the people you are meeting for the first time ... ( and) tells you all the things you want to know before walking in,” he said.
Microsoft likely sees the po- tential of connecting its Office Graph intelligent collaborative platform with LinkedIn’s network, says TJ Keitt, a senior analyst with research firm Forrester.
“This is a data play in many respects. In the enterprise market, Microsoft wants to create a new platform for work that makes it easier for employees to collaborate and get things done,” he said. “LinkedIn, with its profiles, groups and connections, is ideal.”
The acquisition of LinkedIn would be Microsoft’s largest ever; the deal values LinkedIn at $ 196 per share, representing a 49.5% premium over Friday’s closing price.
LinkedIn shares closed Monday up 47% to $ 192.26. Microsoft shares were down 2.6% to $ 50.14.
While Microsoft is paying a premium for LinkedIn, the software giant should gain from the acquisition, says 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 not only helps Microsoft in the office but on social media, he says. “Microsoft has fallen behind in the consumer Internet sector, and this deal gives Microsoft 433 million social LinkedIn members that is growing,” Doshi said. “Just as important, 60% of LinkedIn users are on mobile.”
But there are risks: Microsoft has had a rocky record with acquisitions. Last month, it announced plans to lay off another 1,850 workers and take a nearly $ 1 billion impairment charge, the latest financial damage from its troubled $ 7 billion acquisition of Nokia’s handset business.
Write- downs on that deal have led to huge losses for Microsoft.
Its borrowing costs could rise. Moody’s on Monday said it was reviewing its Aaa credit rating for possible downgrade on fears that borrowing to finance the huge cash purchase could strain its finances.
Besides the hefty payout, LinkedIn stands to expand its recruiting, advertising and sales programs through Microsoft’s extensive connections.