Microsoft To Buy LinkedIn For $35 Billion
Microsoft is buying Linkedin for $35 Billion in a move that will give them access to information on millions of business executives.
The largest aquisition in Microsoft’s history after their doomed Nokia aquisition, Microsoft is hoping that the aquisition will boost interest in their current software offerings that includes Skype and Office 365.
The deal is Chief Executive Satya Nadella’s latest move to revitalise a company that is making a botch of their consumer offering and is struggling and has been left behind by shifts in technology.
The Wall Street Journal said that Mr. Nadella is betting the deal will open new horizons for Microsoft’s Office suite as well as LinkedIn, both of which have saturated their markets, and generally bolster Microsoft’s revenue and competitive position.
Mr. Nadella said in an interview on Monday that “work today is split” between tools workers use to get their jobs done, such as Microsoft’s Office programs, and professional networks that connect workers.
The deal, he said, aims to weave those two pieces together. “It’s really the coming together of the professional cloud and the professional network,” Mr. Nadella said.
The words are similar to what Microsoft management mouthed when they aquired the Nokia phone business tghat ended up costing Microsoft billions.
What Nadella is hoping for is that Microsoft can connect theirOffice offering directly to LinkedIn a move that Microsoft claims will help attendees of meetings learn more about one another directly from invitations in their calendars.
Sales representatives could pick up useful tidbits of background on potential customers from LinkedIn data.
Microsoft also sees opportunities in Lynda.com, a channel for training videos that LinkedIn bought for $1.5 billion last year. Microsoft will be able to offer Lynda’s videos inside its own software, such as Excel spreadsheets.
Microsoft will pay $196 per LinkedIn share, a 50% premium to the social network’s closing price on Friday. Both boards approved the deal, and Reid Hoffman, LinkedIn’s chairman and controlling shareholder, supports the transaction. The companies expect the deal to close by the end of the year.
In the past Microsoft has struggled to integrate previous purchases including the Nokia and aQuantive businesses, costing shareholders billions of dollars in the process.
LinkedIn’s growth has stalled as advertising has struggled. Customers who have purchased the company’s recruiting products have been leaving as well.
Observers claim that the biggest challenge for Microsoft will be digesting LinkedIn. The deal dwarfs every other acquisition the company has made. Microsoft’s next largest deal, buying the Nokia handset business, has been disastrous, with the company largely unwinding the last pieces of that division, taking charges that slightly exceed the $12.4 billion Microsoft ultimately spent to buy the business.
That deal was orchestrated in 2014 by Microsoft’s previous chief executive, Steve Ballmer.
“Sadly, history has shown [synergies] are very difficult to realize when two big companies combine, especially to the extent LinkedIn is remaining an independent fiefdom within the Microsoft empire,” Mitch Kapor, founder of Lotus Development and partner of venture firm Kapor Capital told the WSJ.
The deal highlights Mr. Nadella’s bid to reshape Microsoft, a little more than two years after taking the helm. Mr. Nadella, who rose through Microsoft’s ranks in its business applications and server groups, has focused much of the company’s efforts on products and services for corporate customers.