Microsoft Corp. is buying professional networking site LinkedIn Corp. for US$26.2 billion in its biggest deal, with plans to turn itself into a major force in next-generation computing.
LinkedIn will receive US$196 per share, a premium of almost 50 percent over the stock’s closing price on Friday but below the social media site’s historic high of US$270, Reuters reports.
Microsoft closed down 2.7 percent to US$50.14 after analysts questioned the acquisition price.
Microsoft plans to connect its flagship Word and PowerPoint software with LinkedIn’s network of 433 million professionals, a combination that could enable the company to add a suite of sales, marketing and recruiting services to its core business products.
“LinkedIn and Microsoft really share a mission” of helping people work more efficiently, said Microsoft chief executive Satya Nadella.
Still, there was cautious optimism that this could be one of the relatively few tech mega mergers that works out well.
“It’s a massive growth play for Microsoft,” said Forrester analyst Ted Schadler.
The deal may also help spur further mergers and acquisitions in the tech sector, where a broad correction is bringing down the prices of public and private companies even as a handful of major players sit on large cash piles.
For LinkedIn, founded in 2002 and launched the following year by Reid Hoffman, one of Silicon Valley’s most visible investors and entrepreneurs, the sale marks the end of a classic startup run: funding from top-tier venture capitalists, a long period of building the company and developing a revenue base, then a big initial public offering, followed by a roller coaster stock price.
The company’s growth has slowed recently and investors have become far more cautious on the high valuations of many tech companies — both of which likely figured into LinkedIn’s decision to sell, analysts said.
– Contact us at [email protected]