Ripples were created in social media and news today as Microsoft announced that it would be acquiring LinkedIn for a whopping $26.2 billion which would break down to $196 per share, in cash. The deal has more or less been finalized with boards from either sides having approved of the transaction. While the deal awaits regulatory and other approvals Microsoft’s SEC filing states that LinkedIn will have to pay Microsoft $725 million should the transaction be terminated at this point.
As per the details of the merger LinkedIn will retain its branding and product while LinkedIn’s CEO Jeff Weiner will report to Microsoft’s Satya Nadella. Post the merger Linkedin will be a part of Microsoft’s business segment.
The acquisition will be a strategic one for Microsoft as it will help the company reach out into enterprise social networking as well as provide sales channels for its products. While Microsoft had acquired Yammer for $1.2 billion in 2012, LinkedIn will give the company unique access to its large base of 433 million employers and employees who currently use the enterprise networking.
Similarly, for LinkedIn, the move offers an opportunity to compete with companies that are now slowly building competitive software to challenge LinkedIn, in addition to their social graphs. The competition had become stiff for LinkedIn given their dropping share price and recent issues with user and revenue growth. Despite these ssues however, LinkedIn remains one of the best tech companies performance wise.
Microsoft has, till date, been known primarily for its software. However, the company has been making slow and progressive moves towards entering enterprise social networking for quite sometime. With the acquisition of LinkedIn, Microsoft can hope to get a better reach in this competitive sector.
Source: Techcrunch.com
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