Behind the Microsoft-LinkedIn Billion Dollar Deal
by Vinay Prakash Mani
Monday, June 13 was indeed a big day for Microsoft. It was announced that the IT company has entered into an agreement with LinkedIn under which Microsoft will acquire the latter for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. The transaction, that is expected to close this year, is fully supported by Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner. So going forward, LinkedIn will be called “Microsoft-owned LinkedIn”.
Indeed it is exciting news for the world involving two giants in their own fields. LinkedIn is world’s largest professional network having around 433 million members with almost 19 percent growth year after year. Then what made Weiner take this decision? According to Time.com, in an email to LinkedIn employees, Weiner explained “Microsoft that has evolved under Satie’s leadership is a more agile, innovative, open and purpose-driven company. It was the latter point that first had me thinking we could make this work, but it was his thoughts on how we’d do it that got me truly excited about the prospect.”
But if we believe on news and articles (published on several websites), it looks like things were not right with LinkedIn. The stocks were down by more than 43% since last July and the company was not hoping to regain in near future. Around 18% of the business came through advertisements, but in Q4 ending in February, they noticed a fall in growth as compared to last year. Since LinkedIn didn’t grow enough in 2015, it was a concern for the investors as well. The number of unique visitors was also not growing well.
Nevertheless, LinkedIn is the most popular professional network. Satya Nadella will surely make something big out of it. Since Microsoft is known for acquiring nearly 200 brands like Skype 2011, Nokia mobile unit in 2013, Touchtype, Groove and Solair in 2016 and now LinkedIn, this deal indeed brings together the world’s leading professional cloud with the world’s leading professional network.