Microsoft to buy LinkedIn for $26.2 bn

Microsoft said on Monday that it is acquiring LinkedIn in a deal worth $26.2 billion

The Dollar Business Bureau

Software giant Microsoft announced on Monday that it is acquiring professional social network giant LinkedIn in a deal worth $26.2 billion.

In its largest acquisition till date, the tech giant bets that LinkedIn's social platform can help to jump-start Microsoft's offerings of software packages by combining them with the huge social network of LinkedIn.

The deal was an all-cash one between the two. Microsoft agreed to pay $196 per share, 50 percent more than the closing price of LinkedIn shares on Friday. With this deal, Microsoft can use LinkedIn’s database of professional information and distribution network for its software packages. LinkedIn too gains by getting additional funding to reach out to millions of people to join its network.

Of late Microsoft was lagging behind by shifts in technology, this deal is viewed as the latest effort by Chief Executive Satya Nadella to revitalise the company. Nadella expects that the acquisition will open new vistas in the horizon for Microsoft’s Office suite and LinkedIn while the revenues and competitive position of both the companies would get a shot in the arm from the downside they were experiencing till date.

The Chief Executive said that with the acquisition the software of Microsoft and the professional networks of LinkedIn would be woven together into a smooth working component. Or as Nadella put it, “a coming together of the professional cloud and the professional network.”

With this acquisition, the software giant could also gain by making use  of, a platform for training videos that LinkedIn acquired last year for $1.5 billion. Microsoft will be able to insert videos of Lynda into its own software applications like Excel spreadsheets. LinkedIn, in turn, can make use of Microsoft's Cortana digital assistant, for its data.

For LinkedIn, the deal provides hope to revive its slowing growth and stem the departure of its stakeholders after its stocks dropped from a high of $269 in February 2015 to $101.11 in February this year.

Both the company’s boards have approved the deal, and LinkedIn’s Chairman and major shareholder, Reid Hoffman, favoured the transaction. Jeff Weiner Chief Executive LinkedIn will retain his present job when the deal completes, which both the companies believe will happen by the end of this year.

The Dollar Business Bureau - Jun 14, 2016 12:00 IST