Microsoft Acquires Professional Social Network LinkedIn As Part of Its Transformation Bids

Microsoft Corp. is going to acquire LinkedIn Corp, a business oriented professional networking site for $26.2 billion (£18 billion) in cash. The all cash transaction is going to be the largest tech deal so far for this year. The acquisition appears as the chief executive Sattya Nadella intends to transform Microsoft as one of the best-known companies in the world.

The Redmond based software giant has agreed to pay $196 against each share under the deal. The agreed price accompanies 49.5% premium from the price of LinkedIn shares during the close of trading hours on June 10. The deal will enable Microsoft accessing the world’s largest social network for the professionals with more than 430 million members globally, reports BBC quoting Ben Wood, head of research at CCS Insight.    

Reid Hoffman, the LinkedIn board chairman expresses through a statement enjoying re-founding moment following the agreement. Jeff Weiner, the LinkedIn CEO will continue his service even after the acquisition and Sattya Nadella will act as his reporting boss. Irish Independent predicts, the deal will close by the end of 2016.

Though Microsoft has agreed to pay a hefty premium, but the dealt price appears well below its highest trading price of $270 a share, recorded in 2015. Forecasts for weaker growth from analysts earlier this year have caused LinkedIn shares to tumble. Slower online ad revenue has also added to the professional social network’s misery. Notably mentioning, LinkedIn shares have gone public in 2011 at a price of $45 per share.

Microsoft has been acknowledged as the world’s largest software company since initiation of the computing era. However, the globalFinancial Times.

software giant has been witnessed struggling to boost up growth due to rapid booming of smart phones. Silicon Valley rivals Google and Apple have surpassed Microsoft in respect of revenue growth and business value though they have emerged in the market long after the software conglomerate, according to a report published in

Mr. Nadella has strategically decided to go beyond Microsoft’s trademark products based on Windows. He has emphasized on providing an array of software for different platforms and devices.

Acquisition of LinkedIn will enable Microsoft linking the professional network with Cortana, its intelligent digitized assistant. The tech giant’s customer relationship management software may also be used for establishing the linkage.

The social network for the specialized personnel enjoys a growing network with more than 100 million monthly active subscribers. However, share prices of LinkedIn has been witnessed to fall by around 40% just prior to the deal has been announced. Earlier, analysts have forecast for slower growth of the company since subscription services, its core product is vulnerable to the ongoing global economic slowdown.

Since mode of official communications in the corporate world has been changed, so both the specialized companies have been facing immense competition in their respective fields. The change in consumer interest may even be reflected in the use of internet driven by the specialized social networks, predict some analysts.    

Price of LinkedIn shares has been witnessed to jump 47%, but falls 2% in case of Microsoft following announcement on the deal. Mr. Nadella has committed retaining LinkedIn as a distinct brand while encouraging his staffers start using the network to learn more. Microsoft has forecast on June 13 that the acquired will return to profit by fiscal 2019 despite recording losses during the last couple of years.