Microsoft to acquire LinkedIn for $26.2 billion

Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn's net cash. Jeff Weiner will remain the CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft

BestMediaInfo Bureau | Mumbai | June 14, 2016

In a major takeover, IT giant Microsoft has decided to acquire professional networking site LinkedIn for $26.2 billion. This is Microsoft's largest acquisition ever and LinkedIn will help the company boost its professional network. Both the companies have entered into a definitive agreement under which Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion. This is inclusive of LinkedIn's net cash.

LinkedIn will retain its distinct brand, culture and independence. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction which is expected to close this calendar year.

Satya Nadella, CEO of Microsoft, 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 organisation on the planet.”

LinkedIn is the world's largest professional network. Over the past year, the company has launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn newsfeed to deliver better business insights; acquired a leading online learning platform called Lynda.com to enter a new market; and rolled out a new version of its recruiter product to its enterprise customers. These innovations have resulted in increased membership, engagement and financial results, specifically.

Jeff Weiner, LinkedIn CEO, said, “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. 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 transaction has been unanimously approved by the Boards of Directors of both LinkedIn and Microsoft. 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.

LinkedIn has more than 433 million members worldwide, more than 105 million unique visiting members per month, more than 45 billion quarterly member page views, and over 7 million active job listings.

Reid Hoffman, Chairman of the board, co-founder and controlling shareholder of LinkedIn, said, “Today is a re-founding moment for LinkedIn. I see incredible opportunity for our members and customers and look forward to supporting this new and combined business. I fully support this transaction and the Board's decision to pursue it, and will vote my shares in accordance with their recommendation on it.”

Morgan Stanley is acting as exclusive financial advisor to Microsoft, and Simpson Thacher and Bartlett LLP is acting as legal advisor to Microsoft. Qatalyst Partners and Allen & Company LLC are acting as financial advisors to LinkedIn, while Wilson Sonsini Goodrich & Rosati, Professional Corporation, is acting as legal advisor.

Facebook had earlier decided to come up with the business version of its social networking service in 2016. Therefore, a deal like Microsoft-LinkedIn will definitely affect Facebook's strategic planning and expansion.

BestMediaInfo caught up with some digital experts to understand the deal better.

How does Microsoft benefit from the deal?

Vivek Bhargava

Vivek Bhargava, CEO, iProspect, said, "Microsoft will benefit across its suite of products and services.  At the end, it is all about people. LinkedIn is the most comprehensive database of all people in the world. Unlike everything posted on social media, the accuracy of data on LinkedIn is unmatched. Microsoft is going to get a huge competitive advantage across all its divisions through this acquisition."

Gopa Kumar

Gopa Kumar, Vice-president, Isobar India, said, "It's a massive and great buy from Microsoft. I see there are lot of synergy in Microsoft and LinkedIn. LinkedIn provides Microsoft with immediate access to more than 400 million members and a wonderful social graph. LinkedIn always had more B2B connect and with its professional nature, it matches closely with services and products Microsoft provides."

Ekalavya Bhattacharya

Ekalavya Bhattacharya, Chief Strategy Officer, Alt Entertainment, said, “For Microsoft this is a real smart acquisition. I'm sure they had such plans for Yammer when they acquired them. Seamlessly integrating Outlook and Office365 with a strong social graph is definitely going to be appreciated. The enterprise-centric way is definitely the way to go.”

What does the deal imply?

Explaining the deal, Kumar said, "The implications of this deal will be seen in future. Many believe there will be LinkedIn login with every MS based cloud service, from Office 365, Skype to one drive cloud service. This will be like taking a Facebook-like approach for a single business login tied to everything. LinkedIn will be the universal professional profile that will surface in apps like Outlook, Skype, Office and even Windows itself. Microsoft wants to turn LinkedIn profiles into one single identity, and thus turning the newsfeed into an intelligent stream of data that will connect professionals to each other through shared meeting, notes and email activity. It's really the future of using a strong social graph and linking it directly into machine learning and understanding where Microsoft is doing a great deal of late, like its product Cortana and its integration with LinkedIn in future is now a foregone conclusion.

Bhargava said, "Microsoft is going to find it very difficult to build a consumer-led social strategy. However, the company is an undisputed king of the B2B world. I think the LinkedIn acquisition will give Microsoft a competitive advantage for its enterprise business. Social media is no longer about media, it acts like a catalyst and multiplier across all aspects of business. I believe LinkedIn will act like a multiplier across all businesses of Microsoft."

Talking about the nitty-gritty, Bhargava said, "Microsoft has paid a 50% premium for this acquisition, generally this kind of premium is paid when there is a competitive bidding war. One has to look at the advantages of this deal for Microsoft, but one also has to consider the disadvantages of Microsoft if LinkedIn was acquired by others.

Bhattacharya added, "I think it's a really smart move by Microsoft and a great deal for LinkedIn. Firstly, why is it a great deal for LinkedIn? Back in February the LinkedIn stock took quite a blow when they reduced their earnings per share (EPS) estimates. Wall Street panicked. I've always been a huge fan of LinkedIn. I've never made a CV and don't quite understand the relevance of one in the age of LinkedIn and neither have I ever looked someone up on LinkedIn before a meeting. I check my account multiple times during the day. But the thing is that I've never ever been tempted to be a paying user and nor do I care about the ads that I see on LinkedIn. So while the B2B business of LinkedIn has shown the promise they really need to get more out of their users."

Will the marketers benefit?

Commenting on how the marketers will benefit from the deal, Kumar said, "Too early to gauge the impact on marketers. I guess better data profiling and also connecting the social graph will result in knowing the customer in a better way."

Talking about how will the marketers gain from the deal, Bhargava said, "Today all advertising is about data. The LinkedIn data will enrich the entire advertising offering of Microsoft. The data from Outlook, Office, Bing will also enhance the advertising efficiency of LinkedIn, so it is going to be great win for marketers."

Kumar also adds, "Linkedin gets better content support which will enrich its content offering to advertisers. I hope they do better than what they did with Skype. After Skype was bought by Microsoft, practically nothing changed."

Info@BestMediaInfo.com

Info@BestMediaInfo.com