Microsoft Adds LinkedIn into its Network

The professional network LinkedIn is being bought by Microsoft for just over $26 billion in cash. They are paying $196 for a share. Through this deal, Microsoft will be able to improve their business and email software. Microsoft has also added that despite this LinkedIn will be able to retain its “distinct brand, culture and independence”.

The head of research at CCS Insight, Ben Wood stated that this deal would help Microsoft to access the biggest professional social network in the world. He also stated that “That’s a valuable asset that can be deeply integrated with a number of Microsoft assets such as Office 365, Exchange and Outlook. That said, Microsoft has stated that the company will continue to operate as an independent business, so we’ll have to see how deeply the integration occurs.” Microsoft has a long history of successfully integrating acquisitions, for example, Minecraft, which was bought for $2.5 billion in 2014.

This deal was possible after a time in which the shares had fallen and there were mounting losses, however, they were able to persuade Microsoft to make its biggest deal. The amount is about the same market value as skype, and it is eight times as much as Daily Mail owner DMGT, and both of these are profitable.

However this deal is not just about money, it shows the power of Sataya Nadella, who is CEO of Microsoft. He wants to broaden their reach and wants to be able to provide all types of professional services to their clients, including connecting them to each other. Also, Microsoft will be provided with immediate access to users in a professional network.

There was also similar logic behind the deal which bought the Nokia mobile phones division. The investors for Microsoft may see this deal a bit apprehensively. However it has been good news for LinkedIn and its shareholders, the shares went up 47%, which means from $61.50 to $192.60. While the shares at Microsoft have dropped 2.6%, making the decline for this year 10%.

Jeff Weiner will remain the chief executive and will be reporting to Nadella. The deal was backed by He Reid Hoffman who is the chairman, co-founder and controlling shareholder of LinkedIn. It has been said that LinkedIn is attempting to expand through offering users more messaging options, mobile apps and a revamped “newsfeed” to help boost engagement. In the past, there had been complaints regarding frequent and not relevant information, and they have promised to fix this issue.

This is the biggest addition to the Microsoft Corporation, in the past having paid $8.5 billion for skype in 2011. This acquisition also eclipses the $19 billion that Facebook paid for WhatsApp in 2014. Even though Microsoft has a cash pile of $92 billion, they issued that they would be paying by acquiring new debt. The deal which must be approved by regulators in the US, EU, Canada, and Brazil, and they expect it to save them an annual $150 million by 2018.

Let us continue to watch how LinkedIn fits into Microsoft Network.

 

Featured Image via Pixabay

About Urwah Ahmad

Reader and writer by blood, a lover of the two by choice, have an attachment to parrots, learning to make reality into my dreams, one story, picture, and painting at a time, and show others how to look past what we are shown, told, and read, and actually see, tell and write.

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