Microsoft Corp will buy LinkedIn Corp for $26.2 billion (about `1.75 lakh crore) in its biggest-ever deal, combining the software giant's business-productivity tools with an online network of 433 million professionals.
The offer of $196 per share represents a premium of 49.5% to LinkedIn's Friday closing price. LinkedIn's shares jumped 48% to $194.28 on Monday, while Microsoft's shares fell 3.3%. The deal will also help the company in its mission of trying to keep services like Outlook email relevant enough that customers won't want to leave it for competitors such as Google's Gmail.
It will also enable Microsoft expand more in India, with the 35-million user base of LinkedIn in the country, the second largest outside the US (128 million). In India, LinkedIn has 650 employees, and
research & development (R&D) operations in Bengaluru.
For LinkedIn, the opportunity to tap Microsoft's customers, including the 1.2 billion users of its Office suite of business software, could help it jumpstart growth, which has slowed in recent quarters. The company, which enables members to connect with similar-minded professionals and facilitates job hunting, reported a loss of $46 million in the January-March quarter "The professionals of the world can benefit in terms of getting their work done," said Microsoft CEO Satya Nadella, who has been trying to reinvigorate the company since taking over in February 2014, in a phone call.
"The Venn diagram is pretty big, "he said, meaning the overlap of customers of both companies, although he didn't give a precise number.
He gave an example of a customer walking into a meeting scheduled on a Microsoft Outlook calendar integrated with LinkedIn, receiving notification that one of the people in the meeting went to college with a colleague.
"The future of productivity is around people, identity and data and the relationships between them,"said Matt McIllwain, a portfolio manager at Madrona Ventures. "Microsoft is buying LinkedIn for the opportunity to leverage these capabilities and combine them with Microsoft's strong but complimentary assets in those three areas.
"Today is a re-founding moment for LinkedIn," Reid Hoffman, chairman of LinkedIn's board, said in a statement.
Jeff Weiner will remain chief executive of LinkedIn, reporting to Microsoft CEO Satya Nadella.
"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.
The deal is expected to close in 2016, the companies said in a joint statement. It requires approval from regulators in the US, the EU, Canada and Brazil. After the deal, LinkedIn will become part of Microsoft's productivity and business processes unit.
Microsoft's other big acquisitions include Skype ($8.5 billion), Nokia ($8.5 billion),Yammer ($1.2 billion) Fast Search & Transfer ($1.2 billion), among others.