Microsoft announced last week that a deal has been finalised to purchase professional networking site LinkedIn for just over $26bn. This will be Microsoft’s largest ever acquisition and will be on an all-cash basis, making it a confident move by Microsoft.
Microsoft are hoping that LinkedIn’s professional network will synergise well with Microsoft’s cloud network, as well as enhance their customer relationship management software. However, despite the acquisition, Microsoft will strive to maintain LinkedIn’s unique brand and the current CEO, Jeff Weiner, will maintain his role in order to help achieve this goal.
Whilst the deal is still subject to the approval of LinkedIn’s shareholders and other regulatory bodies, the transaction has been unanimously approved by the directors of both Microsoft and LinkedIn. The agreed price of$26bn (£18bn) amounts to roughly $196 per share and should make shareholders happy, as it amounts to a 50% premium on the company’s closing share price the week before the deal was announced.
LinkedIn’s share value had fallen by over 40% in the past year after the company reported an annual loss of $166m back in February, however, the recent announcement has seen them climb a staggering 47%. Unfortunately, the announcement has not had the same effect on Microsoft’s shares, which have dropped 2.6%.
Whether the deal will be profitable in the long-run remains to be seen, but for now, the companies will be seeking the approval of the appropriate regulators before the deal can be closed.
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