Microsoft has reached an agreement to acquire LinkedIn for $26.2 billion in cash. The deal would be the largest in Microsoft’s history, dramatically expanding the company’s reach with ownership of the dominant business social network, with more than 433 million members.
LinkedIn, based in Mountain View, Calif., “will retain its distinct brand, culture and independence,” the companies say in a news release. “Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction. The transaction is expected to close this calendar year.”
The purchase price translates into $196 a share, representing a 50 percent premium over LinkedIn’s closing share price on Friday. LinkedIn’s stock is approaching the level of the purchase price in pre-market trading this morning.
Microsoft touts the deal as a combination of the world’s leading professional cloud and the leading professional network.
Hoffman said in a statement, “Today is a re-founding moment for LinkedIn. I see incredible opportunity for our members and customers and look forward to supporting this new and combined business. I fully support this transaction and the Board’s decision to pursue it, and will vote my shares in accordance with their recommendation on it.”
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said in a statement. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
As Nadella notes in the Microsoft video above, it’s his first big acquisition as Microsoft CEO. Although today’s deal is largely a surprise, GeekWire floated LinkedIn as one potential acquisition by Microsoft after Nadella took over back in 2014.
According to a list on Wikipedia that tracks acquisitions, this marks Microsoft’s 196th acquisition of another company. And it is by far the biggest, more than triple the amount Microsoft paid for Finnish phone giant Nokia. (A deal that has largely been unraveled).
Microsoft’s track record on acquiring large companies is mixed. Skype, acquired for $8.5 billion in May 2011, has largely been considered a success. However, the deals for Nokia and aQuantive — the Seattle online advertising company acquired for $6 billion —have been nothing short of busts. More recently, under Nadella, the company has experienced success with smaller deals by largely leaving the acquired companies intact.
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.”