Microsoft to acquire LinkedIn for $26.2 billion

Technology giant Microsoft today said it will acquire professional networking platform LinkedIn in an all-cash transaction valued at $26.2 billion.

Microsoft will acquire LinkedIn for $196 per share in an all-cash deal valued at $26.2 billion, inclusive of LinkedIn’s net cash, Microsoft said in a statement. LinkedIn will retain its distinct brand, culture and independence, it added.

.@Microsoft & @LinkedIn: world's leading professional cloud + world's leading professional network https://t.co/63V90F77Wj

— Satya Nadella (@satyanadella) June 13, 2016

Jeff Weiner will continue to remain the CEO of LinkedIn, and will be reporting to Microsoft CEO Satya Nadella. Speaking on the acquisition, Nadella said, "The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals. 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."

LinkedIn started out in the living room of co-founder Hoffman in 2002 and was officially launched on May 5 in 2003.

LinkedIn has seen 19 per cent growth year-on-year to more than 433 million members worldwide while quarterly member page views rose 34 per cent to over 45 billion. Over 92 million users came from Asia and the Pacific region.

In the first quarter of 2016, LinkedIn’s revenue increased 35 per cent year-on-year to reach $861 million. It had forecast its revenue for the full year 2016 to be in the range of $3.65-3.7 billion.

Weiner said that with the combination of LinkedIn's social network and Microsoft's cloud would give
LinkedIn 'a chance to change the way the world works'. "For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story," said Weiner.

The transaction has been unanimously approved by the Board of Directors of both companies.

LinkedIn shares which had dropped 42 percent this year, have suddenly jumped to 48 percent to $194.35. Microsoft shares on the other hand, fell 2.9 percent according to the Wall Street Journal.

Microsoft has been making some big acquisitions off late. It had bought out Nokia Corp's mobile phone business at $7.2 billion in 2013; in 2011, Microsoft bought Skype for $8.5 billion; it also bought Mojang AB, the maker of video games such as 'Minecraft' for $2.5 billion in 2014.

Since Nadella took over as CEO, LinkedIn is definitely a major aquisition. Microsoft has also made acquisitions such as the Sunrise calendar app at $100 million and to-do app Wunderlist between $100-$200 million in 2015.

Microsoft hasn't stated how it is indeed going to use LinkedIn, but has stated that the professional social network will continue operating as it is.

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Now the hard part: Microsoft CEO touts new Surface tablets (Latest technology news)

Microsoft CEO Satya Nadella speaks at a Microsoft event in San Francisco, California March 27, 2014.

(Reuters) - Satya Nadella has enjoyed a fairly smooth ride in his first 100 days as Microsoft Corp chief executive, but he risks hitting a rough patch next week when he unveils the latest models of the tepidly received Surface tablet.
Investors have lapped up Nadella's "mobile first, cloud first" strategy to recast the venerable software maker as a "devices and services" company, sending its shares up 9 percent since he took the helm.
So far he has stressed the services side of the business, making the momentous move to put Microsoft's Office suite on Apple Inc's iPad. This was popular with Wall Street and more importantly with consumers, who performed 27 million downloads in a matter of weeks.
But Microsoft is expected to unveil the third generation of its Surface devices at an event on Tuesday, laying hints that it will also introduce a smaller tablet, to address the fast-selling lower end of the market dominated by Apple's iPad mini, Amazon.com Inc's Kindle Fire, Google Inc's Nexus and Samsung's Galaxy range.
The devices side of the strategy has been a challenge. Microsoft's Surface, launched in October 2012, has about 2 percent of the market and has not made a dent on Apple's iPad. That fits with Microsoft's 3 percent global share in smartphones.
Given that tiny market, some investors believe Microsoft should not waste time and money on the low-margin hardware business. ValueAct Capital, which led the shareholder revolt last year which culminated in previous CEO Steve Ballmer's retirement, has lobbied against Microsoft's hardware effort, including its costly acquisition of Nokia's handset business.
"Nadella is off to a golden start as CEO, although turning around the tablet and mobile business over the next 12 to 18 months remain his two key Herculean tasks," said Daniel Ives, an analyst at FBR Capital Markets. "If the turbulence gets too rough on the tablet and/or mobile segment, we can potentially see some strategic changes on the horizon around the hardware business."
Despite unspectacular sales, there are signs that Microsoft's Surface Pro 2, which runs the full Windows operating system, is starting to attract Microsoft's core business customers.
"There's certainly tons of interest in the Surface Pro as an Ultrabook (lightweight laptop) replacement that has tablet capabilities," said J.P. Gownder, an analyst at tech research firm Forrester. "It is the No. 1 model I get asked about, it's going to have a lot of eyes on it."
Even if the Surface never dominates the market, Gownder thinks Nadella and Microsoft are right to persevere with hardware, if only as a way of showing other device makers how best to make use of Windows.
"Microsoft would be nuts not to have devices in the mix. The danger is in not exploring," said Gownder. The Surface "is an important product to basically show what their overall vision is for Windows, and also to offer businesses and consumers another choice."
(Reporting by Bill Rigby; Editing by David Gregorio)