Microsoft To Buy Linkedin for USD 26 Billion |

Microsoft To Buy Linkedin for USD 26 Billion

The all cash deal is a steal for Nadella who gets his hands on a huge network


Till recently, Linkedin was making news for all the wrong reasons, be it the spam mails that one gets for getting added to someone’s network or the leaking of one’s password, thanks to the 2012 hacking of the database. However, Microsoft has had the last laugh in this matter – they bought the social network for a whopping 26 billion US dollars.

The deal, which was announced early on Monday morning via a tweet by Microsoft, has already become the butt of jokes on the social media, with some comparing it to the equally crazy deal that rival Facebook did with Whatsapp some years ago for 19 billion US dollars, an amount that evoked snide comments then. 

As per the deal likely to close by the end of this calendar year, Jeff Weiner will continue to helm affairs at and report to Microsoft CEO Satya Nadella. The price that Microsoft would pay amounts to USD 196 per share.

In a blog post (read it here), Microsoft said: “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.”

What’s behind the deal?

A report in New York Times says that Microsoft is actually paying as much for the massive number of resumes that Linkedin contains, in one form or the other. So, effectively, the technology company is seeking to become the HR Consultant to the world through this deal.

Though this sounds implausible at first, the more we think about it, the more it rings true. For, there is no way that Microsoft would spend this kind of money for a networking website that to merely like an article published by a connection or wishing her on her work anniversary.

Even if members of the 400 million strong user-base of Linkedin log in only a few times every year, the company gets to make money as there is perpetual hope that some recruiter might get in touch to offer a dream job. Barely 12 months ago, this service was valued at USD 260 a share though at current levels the value is just about half of this figure.

Salient features of Linkedin

Besides being the world’s largest and most popular professional social network, Linkedin has been a reasonably strong performer on the revenue side. Here is how things stack up (as per data provided by Microsoft):

• Linked has been growing at an astonishing rate of close to 20 per cent year on year. It now has over 433 million members globally.
• The website has recorded a nine per cent growth year-on-year to more than 105 million unique visitors per month.
• Close to 60 per cent of all users on Linkedin access the website over mobile. A result of close to 50 per cent growth year-on-year in recent years.
• The website has grown by 34 per cent year on year to over 45 billion quarterly member page views
• The social network has posted a whopping 101 per cent growth year on year in the job listings category, reaching seven million active listings.

What the CEOs said:

No wonder Satya Nadella is pleased as punch. “The Linkedin team has grown a fantastic business centered on connecting the world’s professionals,” he says. “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. (See the video)

This is among the largest deals in the technology history of the world. In 2015, Dell had acquired a merger with EMC at a massing USD 70 billion, making it the biggest ever acquisition in the technology sector. Facebook’s deal with Whatsapp came at a price tag of USD 22 billion.

Impact Assessment:

The deal might have been a surprise to the markets and industry may still be trying to figure out what it all means, but here is how the immediate response to the deal panned out:

• Shares of Twitter surged 4.7 per cent in active pre-market trade on Monday, singing to gains in the wake of Microsoft’s announcement on buying Linkedin.

• Linkedin has just cancelled this week’s WWDC Live Streaming hosted at its San Francisco office. It left a terse message to this effect and hoped that “attendees would be able to find alternative accommodations." 

• While Linkedin Corp’s shares soared 47 percent in the morning trade, it still remained down 14 per cent over the yearly figures till date. 

TAGS: Microsoft, LinkedIn, Satya Nadella, Facebook, WhatsApp