Microsoft Buys LinkedIn

Posted: Jun 13 2016, 7:47am CDT | by , Updated: Jun 13 2016, 8:22am CDT, in News | Latest Business News


Microsoft Buys LinkedIn
Credit: Microsoft

Microsoft owns now a social network.

Microsoft and LinkedIn on Monday announced they 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, 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. The transaction is expected to close this calendar year.

This acquisition comes rather surprising. Microsoft pays over $26.2 billion for LinkedIn. The business user social network is in good shape. LinkedIn has been growing 19 percent year over year (YOY) to more than 433 million members worldwide. Buying LinkedIn makes definitely a lot more sense than the Nokia deal. Microsoft's strong cloud services business and the social network can be aligned very nicely and there are many synergy opportunities going forward.

The LinkedIn (LNKD) shares jumped over 48% in per-market trading to the level that Microsoft is paying. Microsoft (MSFT) shares have dropped 4% as investors apparently are not sure about what the acquisition means. LinkedIn needs to earn Microsoft in the next years over $26 billion. Annual revenues of LinkedIn have been $3 billion in 2015, growing 35% compared to 2014.

LinkedIn is the world’s largest and most valuable professional network and continues to build a strong and growing business. 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 to enter a new market; and rolled out a new version of its Recruiter product to its enterprise customers. 

“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said. “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.”

“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.”

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.

“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,” said Hoffman. “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.”

Microsoft will finance the transaction primarily through the issuance of new indebtedness. Upon closing, Microsoft expects LinkedIn’s financials to be reported as part of Microsoft’s Productivity and Business Processes segment. Microsoft expects the acquisition to have minimal dilution of ~1 percent to non-GAAP earnings per share for the remainder of fiscal year 2017 post-closing and for fiscal year 2018 based on the expected close date, and become accretive to Microsoft’s non-GAAP earnings per share in Microsoft’s fiscal year 2019 or less than two years post-closing. Non-GAAP includes stock-based compensation expense consistent with Microsoft’s reporting practice, and excludes expected impact of purchase accounting adjustments as well as integration and transaction-related expenses. In addition, Microsoft also reiterated its intention to complete its existing $40 billion share repurchase authorization by Dec. 31, 2016, the same timeframe as previously committed.

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The Author

<a href="/latest_stories/all/all/2" rel="author">Luigi Lugmayr</a>
Luigi Lugmayr () is the founding chief Editor of I4U News and brings over 15 years experience in the technology field to the ever evolving and exciting world of gadgets. He started I4U News back in 2000 and evolved it into vibrant technology magazine.
Luigi can be contacted directly at




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