Mega deal for social network site
Microsoft pays $26 billion to acquire LinkedIn
The news sent LinkedIn’s share price soaring by 50%.
It said LinkedIn would retain its “distinct brand, culture and independence”.
Jeff Weiner will remain as chief executive of LinkedIn, reporting to Microsoft CEO Satya Nadella who said: “The LinkedIn team has grown a fantastic business centered 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.”
Microsoft has made eight acquisitions for more than $1 billion, including Skype in 2011 and Nokia in 2013.
Weiner 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.
“For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.”
LinkedIn is the world’s largest and most valuable professional network. Recent figures show:
- 19% growth to more than 433 million members worldwide
- 9%growth to more than 105 million unique visiting members per month
- 34% growth to more than 45 billion quarterly member page views
- 101% growth to more than 7 million active job listings
However, the company made a loss last year and in the first quarter of 2016 has caused some analysts to baulk at the price paid. The share rocketed today, but are down 40% so far this year.
Russ Mould, investment director at AJ Bell said: “What Microsoft does get is a huge social network of over 400 million LinkedIn users and boss Satya Nadella clearly believes he will be more successful in monetising them than LinkedIn’s own management team, by connecting it with both the Microsoft Office and Microsoft Dynamics software suites.
“However, there are clear caveats to the deal: Big M&A deals rarely deliver all of the hoped-for synergies, especially if the upside is forecast to come from incremental revenues rather than lower costs.
“Technology deals are particularly notorious for failing – Microsoft’s last big deal, the $7.2 billion acquisition of Nokia’s mobile handsets, proved an unmitigated disaster. The unit was shut down in July 2015 at a cost of $7.6 billion, more than initial purchase price paid in 2013
“LinkedIn is currently loss-making and the losses were worse in the first quarter of 2016 than in the first, despite a 35% jump in sales.”