MUMBAI: What comes as a major development in the technology and social media space, tech giant Microsoft has announced its plan to acquire LinkedIn, the social network that connects professionals by the end of this financial year. The company will buy LinkedIn’s shares priced at $196 in an all cash transaction amounting the acquisition to $26.2 billion, which includes LinkedIn’s liquidity as well.
The acquisition will not affect LinkedIn’s branding, work culture and independence, with its CEO Jeff Weiner retaining his position and reporting to Microsoft CEO Satya Nadella.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella has said at a press conference announcing the development. “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,” he added.
In the past one year LinkedIn has shown great growth trajectories ranging around 19 percent growth year over year (YOY) and expanded its network base to more than 433 million members worldwide. The social media platform had released a new mobile friendly version and acquired learning platform Lynda.com to add to its services.
“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,” Weiner said, supporting the acquisition. “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.”
“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,” said LinkedIn co founder Reid Hoffman . “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.”
To carry this high profile M & A forward, Morgan Stanley is acting as exclusive financial advisor to Microsoft, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Microsoft. On the other hand Qatalyst Partners and Allen & Company LLC are acting as financial advisors to LinkedIn, while Wilson Sonsini Goodrich & Rosati, Professional Corporation, is acting as legal advisor.
Microsoft will finance the transaction primarily through the issuance of new indebtedness. Upon closing, Microsoft expects LinkedIn’s financials to be reported as part of Microsoft’s Productivity and Business Processes segment. Microsoft expects the acquisition to have minimal dilution of ~1 percent to non-GAAP earnings per share for the remainder of fiscal year 2017 post-closing and for fiscal year 2018 based on the expected close date, and become accretive to Microsoft’s non-GAAP earnings per share in Microsoft’s fiscal year 2019 or less than two years post-closing.
In addition, Microsoft also reiterated its intention to complete its existing $40 billion share repurchase authorization by Dec. 31, 2016, the same timeframe as previously committed. Microsoft and LinkedIn will host a joint conference call with investors on June 13, 2016, at 8:45 a.m. Pacific Time/11:45 a.m. eastern time to discuss the transaction in detail.
(Source: Microsoft Media Release)
