Huge news today in the world of M&A in enterprise and social networking services: Microsoft has announced that it is acquiring LinkedIn, the social network for professionals with some 433 million users, for $26.2 billion, or $196 per share, in cash. The transaction has already been approved by both boards, but it must still get regulatory and other approvals.
If for some reason the deal does not go through, LinkedIn will have to pay Microsoft a $725 million termination fee, according to Microsoft’s SEC filing detailing the merger.
The $196 per share offer is a big hike on its closing price from Friday, $131.08. (And in pre-market trading, unsurprisingly, LinkedIn’s stock has nearly crept up 64 percent to reach the share price Microsoft is paying. Microsoft’s price is down 4 percent to $49.66 in pre-market trading.)
LinkedIn is keeping its branding and product, and it will become a part of Microsoft’s productivity and business processes segment. LinkedIn’s CEO Jeff Weiner will report to Satya Nadella.
How Microsoft plans to use LinkedIn
The acquisition is a big one for both sides.
For Microsoft, it’s bringing a key, missing piece into the company’s strategy to build out more services for enterprises, and give it a key way to compete better against the likes of Salesforce (which it also reportedly tried to buy).
Today, Microsoft is focused squarely on software (and some hardware by way of its very downsized phones business). But LinkedIn will give Microsoft a far bigger reach in terms of social networking services and professional content — developing the early signs of enterprise social networking that it kicked off with its acquisition of Yammer for $1.2 billion in 2012.
LinkedIn’s wider social network, pegged as it is to groups of employees and employers, will give Microsoft a sales channel to sell more of its products, and will serve as a complement to those that it already offers for collaboration and communication.
In a section called “Selling to Social Selling” in the deck below, Microsoft details how it plans to use LinkedIn’s social graph as an integrated selling tool alongside its existing CRM products (which are second to Salesforce in the market currently). Users of Microsoft’s Dynamics CRM and other systems, it notes, will want to use LinkedIn’s Sales Navigator “to transform the sales cycle with actionable insights” — essentially lots of background information about users that can help find leads, open conversations and close deals.
There are other elements of LinkedIn’s business that are interesting to consider in light of this acquisition. LinkedIn acquired Lynda.com, for example, to spearhead a move into offering online learning tools to users — expanding on their bigger hope of being the go-to place for overall professional development. Now, with Microsoft, you can see how Lynda might be employed to help sell Microsoft software products, and provide assistance in learning to use them. This is also an area that Microsoft is already highlighting as a positive in the deal:
