Microsoft to Buy LinkedIn for $26.2 Billion

(Photo: Wikimedia, Creative Commons)

(Photo: Wikimedia, Creative Commons)

Software giant Microsoft has announced plans to acquire professional social networking site LinkedIn for a sum of $26.2 billion in cash.

Through the partnership, Microsoft hopes to connect the over 1.2 billion users of Office with the 433 million users of LinkedIn in an effort to update and transform the workplace.

Microsoft CEO Satya Nadeila said the news feed featured on LinkedIn will be smarter, as each user's Office calendar will be able to show events that are coming up while on LinkedIn. In addition, LinkedIn training courses on a variety of programs, including Excel, Word, and PowerPoint, will be included in the Office software suite.

In a more futuristic vision, Nadella foresees Microsoft's artificial intelligence assistant Cortana serving as your networking caddy. "Imagine you are walking into a meeting and Cortana now wakes up and tells you about the people you are meeting for the first time … (and) tells you all the things you want to know before walking in and knowing someone because it has access to the professional network," he said.

Microsoft will benefit from the acquisition through its social media presence, which has fallen behind lately. Mizuho Securities analyst Neil Doshi said that 60% of the 433 million LinkedIn users are mobile, which he believes will help to increase the company's consumer "Net mobile presence."

LinkedIn is also set to expand its recruiting, advertising, and sales programs through the partnership, which will give them access to Microsoft's numerous business and consumer connections, with 400 million active users of Microsoft's and Microsoft Office having been downloaded 340 million times on Android and iOS devices.

"We believe that LinkedIn can leverage Microsoft's scale across all three solutions," Doshi said. "In addition, LinkedIn can leverage Microsoft's cloud infrastructure and engineering talent to become more aggressive in all three areas that it operates."

Originally launched in 2003, LinkedIn currently has close to 400 million registered users, although less than 25% of them use the site on a monthly basis. Despite the creation of a blogging platform in 2014 and the purchase of news service Pulse in 2013 for $90 million, the company continues to have trouble keeping users when they are not looking for a job, reports Mike Murphy for Quartz.

LinkedIn has recently worked to improve itself by purchasing online learning site last year for $1.5 billion, and, more recently, launching 50 online learning paths in order to help job seekers improve their skills, writes Nathan Bomey for USA Today.

The purchase will be the largest for Microsoft to date, with LinkedIn valued at $196 per share, representing a 49.5% premium over the closing price on Friday. It is also the first major acquisition for Nadella since he took over as CEO of Microsoft two years ago.

The sale is expected to be completed by the end of the year, with CEO Jeff Weiner continuing to stay in charge. Microsoft announced that LinkedIn will remain an independently-run company. The deal was backed by Reid Hoffman, LinkedIn's co-founder and controlling shareholder.

While LinkedIn closed Monday up 47% to $192.26, Microsoft shares went down 2.6% to $50.14.

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