Microsoft to acquire LinkedIn for $26.2 billion

Yesterday, Microsoft announced that it will acquire professional networking platform LinkedIn in an all-cash transaction valued at $26.2 billion.

Microsoft said in a statement:

Microsoft will acquire LinkedIn for $196 per share in an all-cash deal valued at $26.2 billion, inclusive of LinkedIn’s net cash. It will retain its distinct brand, culture and independence.”

The transaction is expected to close this calendar year.

Microsoft chief Satya 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 organisation on the planet.”

Jeff Weiner will remain CEO of LinkedIn, reporting to Mr. Nadella. Reid Hoffman, Chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction, the statement said. In India, LinkedIn has about 650 employees and R&D operations in Bengaluru.

LinkedIn started out in the living room of co-founder Hoffman in 2002 and was officially launched on May 5 in 2003. It has seen 19 per cent growth year-on-year to more than 433 million members worldwide while quarterly member page views rose 34 per cent to over 45 billion. Over 92 million users came from Asia and the Pacific region.

In the first quarter of 2016, LinkedIn’s revenue increased 35 per cent year-on-year to reach $861 million. It had forecast its revenue for the full year 2016 to be in the range of $3.65-3.7 billion.

Jeff Weiner, CEO of LinkedIn said:

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.” 

Microsoft will finance the transaction primarily through the issuance of new indebtedness. Upon closing, Microsoft expects LinkedIn’s financials to be reported as part of Microsoft’s Productivity and Business Processes segment.

In addition, Microsoft also reiterated its intention to complete its existing $ 40 billion share repurchase authorisation by December 31, 2016, the same timeframe as previously committed. LinkedIn has more than 9,700 full-time employees and is headquartered in Mountain View, California. It has offices in 30 cities, including Bengaluru, Beijing, Chicago, Dubai, Dublin, Hong Kong and London.

Morgan Stanley acted as exclusive financial advisor to Microsoft and Simpson Thacher & Bartlett LLP was the legal advisor to Microsoft. Qatalyst Partners and Allen & Company LLC are acting as financial advisors to LinkedIn while Wilson Sonsini Goodrich and Rosati, Professional Corporation, is acting as legal advisor.

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