SAN FRANCISCO (Diya TV) — Microsoft announced Monday a $26.2 billion deal to acquire the professional social media platform LinkedIn, a deal which translates to $196 per share of the company.
LinkedIn’s share price surged 47 percent after the announcement to near $193, while Microsoft saw a dip of 3.2 percent simultaneously. Trading of Microsoft shares had been halted momentarily for the news of the all-cash acquisition to be announced.
Jeff Weiner will stay on as LinkedIn’s chief executive, and will report directly to Microsoft CEO Satya Nadella. The acquisition was unanimously approved by the boards of both companies, and is expected to be finalized by year’s end. Shareholders and regulators still have to approve the deal before it can become final.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said in a statement. “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.”
Weiner said in a statement to employees that “little is expected to change,” and that they will retain the same titles and managers.
“The one exception: For those members of the team whose jobs are entirely focused on maintaining LinkedIn’s status as a publicly traded company, we’ll be helping you find your next play,” Weiner said. “In terms of everything else, it should be business as usual. We have the same mission and vision; we have the same culture and values; and I’m still the CEO of LinkedIn.”
“This is a great deal,” said Ivan Feinseth, CIO at investment firm Tigress Financial Partners. “LinkedIn is the ultimate business social platform. You have everybody on this, from interns and college students on up to the biggest CEOs,” Feinseth said. “This is a good way for Microsoft to expand in social platforms.”
However, not all experts share Feinseth’s sentiment. In fact, some point to Microsoft’s poor record of making acquisitions pay as the main reason.
The software giant took a combined $13.9 billion in writedowns on its acquisitions of online ad company aQuantive and phone maker Nokia. More, ex-CEO Steve Ballmer has little to show for it $8.5 billion purchase of Skype, though it doesn’t appear to have ever taken a writedown for that acquisition.
The LinkedIn acquisition makes for the largest in Microsoft’s history, and also one of the most expensive transactions in the history of technology.
Feinseth, as well as other analysts, have speculated that Microsoft might additionally amp up efforts to purchase Salesforce.com as a cloud play. Feinseth said that deal could be in the works, and we might eventually see it happen. “Microsoft has the resources … the cash … the balance sheet … and the borrowing ability to acquire a lot more.”
LinkedIn shares have peaked in the past year at $258.39, though that number also means the stock is down more than 14 percent year to date, and 10 percent in the past year. The social media platform has more than 400 million members, and acquired the online education company, Lynda.com, last April. It rolled out a new version of its Recruiter product this year, which the company said increased membership, engagement and financial results.
Shares of Microsoft traded near $50 on Monday, down from their 52-week high of $56.85. The company’s stock has gained more than 8 percent year over year.