Microsoft Buying Out LinkedIn – Most Expensive Deal of the Year

Microsoft Corp. made its biggest deal last Friday, by acquiring the professional social networking company LinkedIn for $26.2 billion. LinkedIn is active in 200 plus countries and has over 105 million monthly active users. Despite recent setbacks, the company is still the most popular professional network around, and acquisition by the tech titan will be mutually beneficial.

As soon as the news was announced on Monday, LinkedIn stock shot up by nearly 50 percent. Unlike Google and Facebook, Microsoft has not tapped the consumer web world. The move is probably to progress in terms of networking and social tools. The acquisition is a very smart move that will strengthen the company’s connection to the professional world, which is from where Microsoft makes most of its money. Microsoft wants to reach out to a large group of professionals with its services and professional content. LinkedIn will provide Microsoft a sales channel where it can not just sell more of its software and hardware products, but also facilitate better communication with existing and potential customers.

Microsoft will pay $196 per share in an all-cash transaction, including LinkedIn’s net cash, a 49.5 percent premium to LinkedIn’s closing price on Friday. All in all, the acquisition is worth $26.2 billion. Also, if by any chance the deal does not go through, LinkedIn will have to pay Microsoft a $725 million termination fee.

When queried about other organizational changes, Microsoft stated that LinkedIn will retain its brand and Jeff Weiner will remain the CEO of the company. The focus is primarily on reaching out to customers with cloud-based services and productivity tools. Microsoft could use the integration in an interesting way, moving forward – with the LinkedIn profile of a professional connected and integrated to all the other tools of Microsoft such as Windows, Skype, Office, etc. For instance, Microsoft’s digital assistant, Cortana, could pull in information about the people involved in the next Skype meeting from LinkedIn, or identify experts of a particular software tool or service in LinkedIn and provide suggestions and solutions for users, and so on. Not to forget, the Analytics data from LinkedIn will help Microsoft in understanding and managing customers and their needs better. In the bigger picture, LinkedIn could be built into a major CRM software system for the sales force.

“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Satya Nadella, Chief Executive of Microsoft said. “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.”

Facebook-Whatsapp deal was closed at $22 billion, which makes the LinkedIn-Microsoft deal one of the biggest in the technology history.

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