Microsoft Corp will reportedly buy LinkedIn Corp for $26.2 billion (AED96.2 billion) in its biggest-ever deal. "LinkedIn and Microsoft really share a mission,” said Microsoft CEO Nadella in a conference call with analysts. "There is no better way to realise that mission than to connect the world's professionals."
By connecting widely used software such as Microsoft Word and PowerPoint with LinkedIn's network of 433 million professionals, the combination could enable Microsoft to add a suite of sales, marketing and recruiting services to its core business products and potentially challenge cloud software rivals such as Salesforce.com Inc, said Reuters.
The $196-per-share price tag represented a premium of almost 50 percent over LinkedIn's stock market value as of Friday, but was still well below the social media company's all-time high of $270. Analysts said the price was rich, and Microsoft's stock closed down 2.7 percent at $50.14.
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 and finally an acquisition.
The company makes most of its $3 billion in annual revenue from job hunters and recruiters who pay a monthly fee to post resumes and connect with people on what's often known as the social network for business.
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.
For Microsoft, the LinkedIn deal is a chance to reverse a terrible track record with acquisitions, including paying $9.4 billion for phone maker Nokia in 2014 and $6.3 billion for ad business aQuantive in 2007. In 2012, it wrote down its aQuantive acquisition by $6.2 billion, and its cumulative writedowns for Nokia total $8.55 billion.
It also paid $1.2 billion for business network Yammer in 2012 and $8.5 billion for video-calling tool Skype in 2011.