Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash, according to the press statement issued by Microsoft. The statement further states that 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. The transaction is expected to close this calendar year.
“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,” Weiner said. “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.”
“It’s really the coming together of the professional cloud and the professional network,” Nadella said in an interview on Monday. Microsoft also sees opportunities in Lynda.com, a channel for training videos that LinkedIn bought for $1.5 billion last year. The deal highlights Nadella’s bid to revamp Microsoft, a little more than two years after taking charge. The tie-up will also put to test Microsoft’s ability to manage a large acquisition.
So, what are going to be the implications of this development? Well, the email sent by Weiner to LinkedIn’s global workforce might be a good start. As Weiner wrote:” No matter what you're feeling now, give yourself some time to process the news. You might feel a sense of excitement, fear, sadness, or some combination of all of those emotions. Every member of the exec team has experienced the same, but we've had months to process,” investors and companies worldwide might just be going through a similar frenzy. Why Microsoft? - Weiner believes that ‘the Microsoft that has evolved under Satya’s leadership is a more agile, innovative, open and purpose-driven company’. Essentially the idea is to combine professional network and professional cloud to unlock new opportunities.
In 2013, Microsoft announced plans to buy the Finnish phone maker Nokia, only to write down the $7.2 billion deal barely a year later. However, as one might argue, unlike Nokia, which was one of many smartphone makers when Microsoft bought it, LinkedIn is a market leader. Jack Gold, analyst at J. Gold Associates said: "Owning LinkedIn gives Microsoft a great way to keep a pulse on what business users are doing on the web and how they may use certain tools and products. This ability will give Microsoft lots of knowledge in how to deploy future products." Now is the time to wait and watch how this deal unfolds.