A new regulatory filing by LinkedIn gives a detailed account of its previously secret acquisition negotiations with Microsoft, revealing that competition from another potential acquirer increased Microsoft’s offer by approximately 22 percent, or about $5 billion, in a flurry of back-and-forth talks over the course of less than two months.
The filing, made public Friday, refers to the other bidder only as “Party A,” but the company has been identified as Salesforce by Bloomberg News, the Wall Street Journal and others. Microsoft submitted “a non-binding indication of interest to acquire LinkedIn at a price of $160 in cash per share” on May 4 of this year, and by the time the companies reached an agreement on June 11, the purchase price had risen to $196 per share in cash, a total of more than $26 billion.
According to the filing, “Party A” continued to press the issue even after LinkedIn agreed to an exclusive negotiation period with Microsoft. The CEO of “Party A,” a.k.a. Salesforce CEO Marc Benioff, pressed the issue on May 25 by emailing LinkedIn CEO Jeff Weiner and co-founder Reid Hoffman to point out that the rising share price of Salesforce at the time had significantly boosted the value of its cash-and-stock bid for LinkedIn.
Ultimately, based on its share price, the value of the Salesforce bid reached as much as $200/share in cash and stock, according to the filing, but Microsoft’s all-cash offer won out in the end.
In addition to documenting Microsoft CEO Satya Nadella’s interactions with Hoffman and Weiner, the filing shows the behind-the-scenes role that Microsoft co-founder Bill Gates played in discussing the potential deal with Hoffman earlier in the negotiation process. Here’s an excerpt from the filing.
On May 9, 2016, Mr. Hoffman and Bill Gates, the co-founder of Microsoft and member of its board of directors, held a meeting, which had been scheduled before a potential transaction between the parties had begun to be discussed. At their meeting, they discussed their perspectives regarding industry trends and the strategy of LinkedIn. The parties also discussed the business rationale and potential benefits to Microsoft of potentially acquiring LinkedIn. Mr. Gates and Mr. Hoffman briefly discussed Mr. Hoffman’s potential involvement with the business following a transaction, including, among other things, his possibly serving on Microsoft’s board of directors, but the parties did not pursue that conversation, instead focusing on their respective visions for a combined company.
In addition to Salesforce, the filing refers to three other potential bidders, including a “Party B” that ultimately “informed LinkedIn that it was no longer interested in pursuing an acquisition of LinkedIn, but remained interested in partnering with LinkedIn,” according to the filing.
The filing was made in advance of a required vote by LinkedIn shareholders on the proposed merger. The merger agreement includes a $725 million termination fee if LinkedIn ultimately decides to take a superior offer.