Microsoft and LinkedIn have done an all-cash deal that will see the US tech giant acquire the professional social network for $26.2bn (€23.26bn), at $196 per share (€174). The per share price represents a premium of 49.5% on LinkedIn's Friday closing price.
"LinkedIn will retain its distinct brand, culture and independence", the company said in a statement, adding that Jeff Weiner will remain as CEO of LinkedIn, reporting to Microsoft CEO Satya Nadella.
The shock deal will go through later this year, subject to approval by LinkedIn shareholders, but it already has the support of LinkedIn co-founder and company chairman, Reid Hoffman, and the rest of the board of directors.
Hoffman 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.”
Growing Pains
LinkedIn has over 443 million members around the globe. Over the past year, the company has ramped up its efforts to turn more profits, after a difficult opening to 2016 that saw its share price crash by 40%.
In Association with
The firm launched a new version of its mobile app, enhanced the newsfeed to deliver better business insights; acquired a leading online learning platform called Lynda.com to enter a new market; and introduced a new version of its Recruiter product to enterprise customers, from which the company derives much of its revenue globally.
From its various activities, LinkedIn grew annual turnover by one-third to €2,740m last year. However, the operating profit before depreciation etc. was only €250m, as it burned through cash to accelerate growth.
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 organisation on the planet.”
Microsoft will finance the acquisition mainly through the issue of new debt, and immediately on closing the deal will report LinkedIn’s financials as part of its Productivity and Business Processes segment.
The surprise move comes as Microsoft continues its plan to move away from being a pure software firm, and with LinkedIn seeking ways to boost growth.
Weiner 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.”
Microsoft employs 1,900 permanent and contract staff in Dublin, having commenced its presence here in 1985, and its operations here include software development and testing, localisation, operations, finance, IT, HR and sales and marketing or the Irish market and EMEA. LinkedIn employs 1,000 people in Dublin and has been in Ireland since 2010.
LinkedIn shares rose on Wall Street after the news, surging 47.8% in early US trading, but Microsoft shares lost 4.1%, possibly as a result of the hefty price-tag on LinkedIn's planned acquisition .
