Microsoft is swooping in to buy CV and soapbox site LinkedIn, in an all-cash deal worth a whopping $26.2bn.
The software giant is paying $196 per share for LinkedIn, a $61 premium on the enterprise social platform's closing price on last Friday.
Jeff Weiner will remain CEO of LinkedIn, reporting to Microsoft’s CEO Satya Nadella. The deal is expected to close this calendar year, and is subject to approval by LinkedIn’s shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions.
In a statement, Nadella said: “The LinkedIn team has grown a fantastic business centred on connecting the world’s professionals. 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.”
LinkedIn is the largest online professional social networking service and claims to have more than 433 million users, making it smaller than Facebook, but larger than other social media sites including Twitter and Instagram.
The company had a shaky start to the year after its market value was slashed by nearly $11bn when its share price dropped by 43 per cent. Prices reached a three-year low of $102.89 - its sharpest decline since the company first publicly listed in 2011.
The professional networking site blamed it on slower online ad revenue growth which stood at 20 per cent in Q1 - down from 56 per cent growth a year earlier. The company’s share prices have been making a slow and steady recovery since.
Last month, LinkedIn made headlines again after analysis of passwords stolen from it last year revealed many of them were very insecure. A black hat hacker, nicknamed Peace, had attempted to sell 117 million stolen LinkedIn usernames and passwords on the dark web.
Microsoft’s investments haven’t always paid off. In a bid to expand into the mobile phone business, the company bought Nokia for $7.2bn. The move was a flop, however; 15 months later in July 2015, Microsoft announced a $7.6bn adjustment of its Phone hardware business and had to lay off 1,850 staff. Microsoft has since hinted that its mobile phone business may be nearing its end, as the company has not planned to release any more devices for their flagship Lumia series.
“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,” said Weiner.
This is Satya Nadella’s biggest buy since he replaced Steve Ballmer as Microsoft’s CEO in February 2014. The firm's most recent financial results show Microsoft’s quarterly cash and short term investments honeypot stood at $105.55bn.
Microsoft’s shares were down five per cent on its Friday closing price on the news but have since recovered. LinkedIn’s shares, however, have shot up 47 per cent over the same period.
In a widely circulated memo, Nadella told Microsoft staff the deal potentially "brings together a professional's information in LinkedIn's public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you're trying to complete.
"As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow," he continued. "And in turn, new opportunities will be created for monetization through individual and organization subscriptions and targeted advertising."
He added, "This deal is the next step forward for Office 365 and Dynamics as they connect to the world's largest and most valuable professional network. In essence, we can reinvent ways to make professionals more productive while at the same time reinventing selling, marketing and talent management business processes." ®
Facebook bought out Instagram in 2012 for about $715m.