Microsoft to Acquire LinkedIn for US $26 Billion, Gets on the Social Ad Dollars Map
What: Microsoft has entered into an agreement to acquire LinkedIn, the social network for professionals , for US$196 per share in an all-cash transaction valued at US$26.2 billion. LinkedIn will retain its distinct brand, culture and independence. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft.
Why it matters: Microsoft gains a very strong social offering for B2B. (See interview below with digital marketing expert Xavier Mantilla.
Microsoft Corp. and LinkedIn Corporation have entered into a definitive agreement under which Microsoft will acquire LinkedIn, the social network for professionals , for US$196 per share in an all-cash transaction valued at US$26.2 billion, inclusive of LinkedIn’s net cash.
LinkedIn will retain its distinct brand, culture and independence. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction. The transaction is expected to close this calendar year.
The transaction has been unanimously approved by the Boards of Directors of both LinkedIn and Microsoft. The deal is subjected to approval by LinkedIn’s shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions. Morgan Stanley is acting as exclusive financial advisor to Microsoft, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Microsoft. 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.
LinkedIn is the world’s largest and most valuable professional network and continues to build a strong and growing business.The network is active in over 200 countries and has 105 million monthly active users, with 433 million registered overall. Over the past year, the company has launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn news feed to deliver better business insights; acquired a leading online learning platform called Lynda.com to enter a new market; and rolled out a new version of its Recruiter product to its enterprise customers.
The LinkedIn acquisition brings great professionals into the Microsoft sphere; like Ana Moises and Osvaldo Barbosa de Oliveira that are giants in the ad business in Brazil.
LinkedIn will give Microsoft a bigger reach in terms of social networking services and professional content and a potential sales channel to sell more of its products.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said. “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.”
Users do see LinkedIn as a property for growth and learning. So its “time invested” rather than “time spent” which makes them more valuable.
Microsoft will finance the transaction primarily through the issuance of new debt. 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.
Portada spoke with digital marketing expert Xavier Mantilla, on this latest acquisition:
Portada: Can you please give us your overall view of the Linked In acquisition by Microsoft? What will Microsoft (MSFT) gain?
X.M: "MSFT acquiring LinkedIn is a very interesting move. Last year, LinkedIn brought into its technology teams the folks from Triggit and this opened up within the LinkedIn environment a strong social advertising team, and more than that, a great team that built one the best social platforms (working with Facebook, Instagram, Twitter and others) that focuses on performance so this brings a new wrinkle into MSFT’s playbook.The acquisition also puts MSFT on the map in regards to social dollars, and thinking that they could add a Talent Acquisition module that would work with Dynamics (their data platform), this could be a game changer for the Talent segment as most companies rely on the subscription to LinkedIn to recruit candidates –world wide companies like Manpower, Michael Page, Hedrick and Struggles among other powerhouses, and this puts MSFT square in the middle of this world."
Portada: How does this alignment impact other alliances/ mergers (Verizon/AOL, Faceboook ecosystem?
X.M: "For MSFT – they become hugely important in the FB ecosystem as the LinkekIn capacity and technology works so well with FB, so this would make them a strong candidate to be used for ad dollars flowing across MSFT and FB, and so MSFT can now have a strong social offering for B2B, and with Dynamics as a strong platform competing with Oracle and Watson, there is definitely an upside with the public relations they will get from this acquisition. I don’t think this impact Verizon/Aol much other than MSFT will be a stronger B2B player."
Portada: Any other thought you may have on how it impacts U.S. Hispanic or Latin America
X.M: "For Latin America –LinkedIn is seen as an investment of time for people in the region, this is mirrored for U.S. Hispanics, so users do see LinkedIn as a property for growth and learning, rather than seen as just “time spent” but as “time invested” which makes them more valuable from an investment point of view. As MSFT has streamlined the team in Latam, the LinkedIn acquisition brings great professionals like Ana Moises and Osvaldo Barbosa de Oliveira that are giants in the ad business in Brazil, but Ana comes from spending time at Microsoft, so you have executives that can do the regional sales, rather than using rep firms to resell their ad space. This will continue the shift to companies buying directly from vendors and jumping representatives in various countries, so better deals will be made. For U.S. Hispanic, the Talent Acquisition piece can become hugely important with the need to be more diverse continue, and so Microsoft could have the best pool of candidates for companies to look for experienced talent with a diverse background (Latinos)."