Microsoft Buying LinkedIn For $26.2 Billion

[Tay]

Looks like Microsoft is in a buying mood, they are buying up Linkedin for a nice premium - $26.2 Billion = 36 Instagrams.

Microsoft is swooping in to buy CV and soapbox site LinkedIn, in an all-cash deal worth a whopping $26.2bn.

The software giant is paying $196 per share for LinkedIn, a $61 premium on the enterprise social platform's closing price on last Friday.

Jeff Weiner will remain CEO of LinkedIn, reporting to Microsoft’s CEO Satya Nadella. 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.

In a statement, 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 organization on the planet.”

LinkedIn is the largest online professional social networking service and claims more than 433 million, making it smaller than Facebook, but larger than other social media sites including Twitter and Instagram.

“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,” said Weiner.

This is Satya Nadella’s biggest buy since he replaced Steve Ballmer as Microsoft’s CEO in February 2014. The firm's most recent financial results show Microsoft’s quarterly cash and short term investments honeypot stood at $105.55bn.

[..]

In a widely circulated memo, Nadella told Microsoft staff the deal potentially "brings together a professional's information in LinkedIn's public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you're trying to complete.

"As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow," he continued. "And in turn, new opportunities will be created for monetization through individual and organization subscriptions and targeted advertising."

He added, "This deal is the next step forward for Office 365 and Dynamics as they connect to the world's largest and most valuable professional network. In essence, we can reinvent ways to make professionals more productive while at the same time reinventing selling, marketing and talent management business processes."


Source: Microsoft buys LinkedIn for the price of 36 Instagrams

The last part of Nadella's statement has some people concerned Linkedin will require users to upgrade to Windows 10 to login - and from some of Nadella's statements... Who knows.​

 

[Stephen]

Sad day really as we know what will happen now, on the other hand Linkedin is a really un-optimised company and I would already assume MS won't quite figure out what is needed. The floor is open for at least two more competitors in this space I reckon.

 

[Ryuzaki]

$26.2 Billion = 36 Instagrams.

I lol'd.

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.

This is a pretty interesting move on their part. They have turned Office from a one-time payment software product to a Cloud-based SaaS. This is the kind of thing they need, by integrating a LinkedIn news feed and recommendations to use as sources and all of that. If cubicle-people aren't already living in Office, they will be soon. All they need to do is reward you with a game of solitaire for every four hours clocked inside Office, give you badges and other types of gamification.

I think this is a smart move, in the abstract theoretical fashion. But as Stephen said above, they'll likely butcher the execution.

 

[contract]

My guess:

Aside from the front end social appeal...

M$ is going to take advantage of all that data and attempt to push out their corporate tech solutions. It's a gold mine CRM. (For both business and personal profiles) + They now have the ability to read all the logged private conversations... Blackmail, insider secrets, future proposals, etc.

They've been making a push towards tracking people more and more. If Windows 10 wasn't obv enough.. Linkedin, offers a huge mine of data to work with.

Makes you wonder, what are they doing with all this data collected...

 

[Philip J. Fry]

Seems like a rational move to me: a company that produces office products buys a community of professionals who all use office products.

Will they blunder it? Well, they are paying a 45% premium for the shares. If they can't increase the value of LinkedIn by 45% then, yeah, they totally over-paid.

MS is valuing LinkedIn at 11.8 billion over what the market valued LinkedIn. Here says LinkedIn's userbase is 433 million professionals. So, would indepth data about 433 million professionals be worth $28 to an office products SaaS?

I'd think so.

Office 360 is $99/year for the basic subscription and the average market multiplier is 10x.

I'm sure Microsoft can increase the value of a professional by more than $28 over a 10 year period, especially since the product they sell costs $99. That's only a $2.80/year increase if every LinkedIn professional already uses Office.