Microsoft to acquire LinkedIn in $26.2bn deal

Microsoft is acquiring professional social network LinkedIn for $26.2bn (€23.19bn) in one of the largest tech-industry deals on record, as the maker of Windows software attempts to put itself at the centre of people’s business lives.

The deal is a way for Microsoft — which largely missed out on the consumer web boom dominated by the likes of Google and Facebook, to sprint ahead in social tools — in this case, for professionals. While CEO Satya Nadella has drawn kudos for efforts to reshape the company and reignite sales growth, the board is urging an even faster shift toward software and services delivered over the internet.

Microsoft will pay $196 per share in an all-cash transaction, inclusive of LinkedIn’s net cash, a 49.5% premium to LinkedIn’s closing price on Friday. 

LinkedIn will retain its brand, culture, and independence and Jeff Weiner will remain chief executive officer of the company, Microsoft said yesterday.

The offer values LinkedIn about 91 times earnings before interest, taxes, depreciation, and amortisation, according to data compiled by Bloomberg. That’s the highest multiple of any takeover valued at over $5bn this year, the data show.

“This is about the coming together of the leading professional cloud and the leading professional network,” Mr Nadella said. “This is the logical next step to take. We believe we can accelerate that by making LinkedIn the social fabric for all of Office.”

The deal is the biggest ever for Microsoft as Mr Nadella focuses on appealing to business customers with cloud-based services and productivity tools.

In a presentation announcing the deal, Microsoft outlined a vision in which a person’s LinkedIn profile resides at the middle of other pieces of their work life, connecting with Windows, Outlook, Excel, PowerPower, Skype, and other Microsoft products.

Microsoft’s digital assistant Cortana could provide users with information pulled from LinkedIn about participants in an upcoming meeting, for example, while a LinkedIn newsfeed will serve up articles based on projects that users are working on. 

Other products could include a kind of consulting service that will suggest an “expert” who might be able to help with a project.

Microsoft could build LinkedIn, the largest global professional network, into a major customer relationship management software system for salespeople, pushing into an area dominated by Salesforce.com, said Anurag Rana, a senior analyst for Bloomberg Intelligence.

“LinkedIn could really become a really big competitor for Salesforce going forward,” he said.

LinkedIn shares surged 47% to $193.01 in New York, yesterday morning, their biggest intraday jump since 2011.

* Bloomberg


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