LinkedIn shares up 47% on Microsoft $26B bid – USA TODAY
Tech giant Microsoft said Monday that it had reached a deal to acquire professional social networking site LinkedIn for $26.2 billion in cash.
The deal values LinkedIn at $196 per share, representing a 49.5% premium over Friday’s closing price.
The companies said their respectiveÂ boards had unanimously approved the deal. LinkedIn CEO Jeff Weiner will keep the title and report to Microsoft CEO Satya Nadella.
âThe LinkedIn team has grown a fantastic business centered on connecting the worldâs professionals,â Nadella said in a statement. âTogether 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.â
âJust as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedInâs network, now gives us a chance to also change the way the world works,â Weiner said. âFor the last 13 years, weâve been uniquely positioned to connect professionals to make them more productive and successful, and Iâm looking forward to leading our team through the next chapter of our story.â
The $26.2 billion deal would be Microsoft’s largest ever andÂ the third biggest merger or acquisition of 2016, according to Dealogic, behind the $32 billion merger in January of pharmaceutical companiesÂ Baxalta andÂ Shire (SHP)Â .
LinkedIn has about 430 million members and has sought to expand its workplace education offerings — it acquired online learning site Lynda.com last year for $1.5 billion. Three months ago, LinkedIn launchedÂ 50 online learning paths to help job seekers improve their skills.
“LinkedIn is a highly strategic suite of enterprise productivity tools and perhaps the go-to destination for B2B marketing on the Internet,” said Scott Devitt, internet equity research director for investment banking firmÂ Stifel. Devitt had a Buy rating with a target price of $180 for LinkedIn in hisÂ most recent note to investors.
While Microsoft is paying a premium for LinkedIn, the software giant should gain from the acquisition, saysÂ Mizuho SecuritiesÂ analyst Neil Doshi. “This transaction makes sense to us. We’ve always considered two potential acquirers for LinkedIn – Salesforce or Microsoft,” he said in a note to investors Monday.
The deal increases Microsoft’s presence on social media, he says. “Microsoft has fallen behind in the consumer Internet sector, and this deal gives Microsoft 433 million social LinkedIn members that is growing,” Doshi said. “Just as important, 60% of LinkedIn users are on mobile, and this should accelerate Microsoft’s consumer ‘Net mobile presence.”
Meanwhile, LinkedIn can expand its recruiting, advertising and sales programs though Microsoft’s extensive business and consumer connections. Microsoft’s Outlook.com alone has 400 million active users and Microsoft Office has been downloaded 340 million times on Android and iOS devices, according to Microsoft. “We believe that LinkedIn can leverage Microsoft’s scale across all three solutions,” Doshi said. “In addition, LinkedIn can leverage Microsoft’s cloud infrastructure and engineering talent to become more aggressive in all three areas that it operates.”
Evidently, Nadella and Weiner have been brainstorming a collaboration for some time.Â In a video on Microsoft’s site, the two discuss how theyÂ might collaborate. “I am a deep believer in in productivity tools and communication tools because that is what empowers people to be able to be great at their job,” said Nadella, who said that he is a LinkedIn user who publishes on the platform. “ButÂ think about taking that and connecting it with the professional network and really having that entirety of what is your professional life be enhanced, more empowered,Â where you are acquiring new skills and being more successful in your current job and finding a greater bigger next job. Thatâs that vision.”
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.