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Microsoft pays 49% premium to buy LinkedIn


Microsoft is buying social media networking company LinkedIn for more than $ 26 billion US.

In a release Monday, Microsoft announced it would pay $ 196 US for every share in LinkedIn, a professional networking website at which users post their resumes online and can contact other companies and professionals. It has 430 million members, according to its most recent regulatory filings.

The price represents a 49 per cent premium from Friday’s closing price of LinkedIn shares.

“The LinkedIn team has grown a fantastic business centred on connecting the world’s professionals,” Microsoft chief executive Satya Nadella said in the release. “Together we can accelerate the growth of LinkedIn, as well as Microsoft.”

It is Microsoft’s biggest purchase since Nadella became CEO in 2014.

If the deal is approved by regulators, LinkedIn will stay on as an independent unit within Microsoft, and chief executive Jeff Weiner will stay on at the company.

In LinkedIn, Microsoft gets access to more than 400 million customers and the opportunity to sell them more business tools, cloud services and other products.

“The acquisition makes sense in respect of Microsoft’s link with enterprise in its cloud platform and portfolio of enterprise business services,” professor Mark Skilton of Warwick Business School said.

“It will help Microsoft build out its enterprise services capabilities.”

Microsoft stock dropped on Monday, as investors expressed skepticism about the deal. Not only is LinkedIn not profitable, it is difficult to see what synergies there might be between the two companies, said Marvin Ryder, an assistant professor at  McMaster University’s DeGroote School of Business.

The tech giant also has made some major missteps in its acquisitions — buying hardware company Nokia and professional services network Yammer without achieving much from the purchases.

Nonetheless, Microsoft is getting an established professional social network, Ryder said n an interview with CBC’s The Exchange. 

This is the way the world is going. Everything is  moving toward some kind of social media. If you’re not there, like if you don’t have something on mobile, you can’t really compete. This positions them for 2020 and beyond,” he said.

CBC | Business News