Microsoft to Buy LinkedIn

Microsoft (MSFT) is shelling out $26.2 billion to buy LinkedIn. The deal is all cash, and Microsoft is paying $196 per shares for LNKD. That’s a 50% premium from Friday’s close, but it’s well below LNKD’s high of $276.18 from February 2015.

Microsoft said LinkedIn will “retain its distinct brand, culture and independence,” with Chief Executive Jeff Weiner remaining at the helm, reporting to Microsoft CEO Satya Nadella. The deal, the largest acquisition ever for Microsoft, is expected to close within the year.

The companies see cost savings of about $150 million a year by 2018. LinkedIn would be required to pay a $725 million breakup fee if it backs out of the deal.

Microsoft believes the acquisition will expand the market for both LinkedIn and Microsoft’s Office products. The software giant has made a significant push in the past few years to make its products more connected and wants to use data to make them more intelligent. LinkedIn’s vast network offers data that could help.

Microsoft may find ways to generate revenue from LinkedIn’s professional network that LinkedIn couldn’t independently, said Stifel Nicolaus & Co. analyst Brad Reback.

Shares of Microsoft dropped to $49 this morning but have since rallied to about $50.50.

Posted by on June 13th, 2016 at 11:19 am


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