Microsoft said on Monday that it was acquiring LinkedIn in a $26.2-billion cash deal, as the company seeks new sources of growth on the internet. The acquisition, by far the largest in Microsoft's history, unites two companies in different businesses: one a big maker of software tools, the other the largest business-oriented social networking site with more than 400 million members globally. Both, though, make most of their money by catering to professionals.
Executives involved in the deal said that the common thread prompted the acquisition. "This deal is all about bringing together the professional cloud and professional network," Satya Nadella, Microsoft's chief executive, said in a telephone interview.
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Microsoft has bought its way into new businesses before, though most of its largest deals have not turned out well. It paid nearly $9 billion for the smartphone operations of Nokia and more than $6 billion for aQuantive, an internet advertising company, but ended up writing off most of the value of those deals after they performed poorly. Nadella, who took over as chief executive in February 2014, was not involved in those deals. Since assuming leadership of the company, he has made mostly smaller acquisitions, with the exception of the $2.5-billion deal to acquire the maker of the game Minecraft.
Nadella said that when Microsoft had pursued deals that were closer to Microsoft's core products - including the $8.5-billion acquisition of Skype - the deals have worked out.
"Every time we've gotten it right, we've had success in those dimensions," Nadella said. He has in some ways improved Microsoft's fortunes by accelerating the company's shift from traditional software to cloud applications and services. Its stock has risen significantly under Nadella's leadership.
Yet big challenges remain for the company in today's technology landscape, where new powerhouses like Amazon.com, the leader in cloud computing, have a significant head start.
LinkedIn could help Microsoft accelerate its shift to the internet by giving it a large online property that has became the de facto standard for posting resumes online. The site is heavily used by recruiters for finding new workers. Microsoft is one of LinkedIn's biggest customers. "The mission statements of LinkedIn and Microsoft have different words, but are essentially same," Jeff Weiner, the chief executive of LinkedIn, said in an interview. "We've come at it from different perspectives. LinkedIn built a professional network. Microsoft built a professional cloud."
The companies said that Microsoft had agreed to pay $196 a share to buy LinkedIn, a business social networking site that has more than 400 million members globally. The companies said Reid Hoffman, a founder of LinkedIn and its controlling shareholder, had approved the deal, as did Weiner. Weiner will remain chief executive of LinkedIn, which will operate as an independent brand, the companies said.
LinkedIn shares had fallen by almost half since a peak of nearly $260 a share last fall and ended trading on Friday at $131.08.
© 2016 The New York Times News Service
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LinkedIn buy my biggest acquisition as CEO: Satya Nadella Team, I’m excited to share that today Microsoft announced a deal to acquire LinkedIn. You can see how Jeff Weiner, the CEO of LinkedIn, and I envision the opportunity ahead in this public presentation. This deal brings together the world’s leading professional cloud with the world’s leading professional network. I have been learning about LinkedIn for some time while also reflecting on how networks can truly differentiate cloud services. It’s clear to me that the LinkedIn team has grown a fantastic business and an impressive network of more than 433 million professionals. Given this is the biggest acquisition for Microsoft since I became CEO, I wanted to share with you how I think about acquisitions overall. To start, I consider if an asset will expand our opportunity — specifically, does it expand our total addressable market? Is this asset riding secular usage and technology trends? And, does this asset align with our core business and overall sense of purpose? The answer to all of those questions with LinkedIn is squarely yes. We are in pursuit of a common mission centred on empowering people and organisations. Along with the new growth in our Office 365 commercial and Dynamics businesses this deal is key to our bold ambition to reinvent productivity and business processes. Think about it: How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world. It requires a vibrant network that brings together a professional’s information in LinkedIn’s public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete. As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow. And in turn, new opportunities will be created for monetisation through individual and organisation subscriptions and targeted advertising. Jeff and I both believe we have a significant opportunity to accelerate LinkedIn’s growth and the value it brings to its members with Microsoft’s assets and scale. In fact, when Reid Hoffman, the founder of LinkedIn, and I spoke about the opportunity for us to come together, he called it a “re-founding” moment for LinkedIn and an opportunity to reach the mission the company set out on 13 years ago. The opportunity for Office 365 and Dynamics is just as profound. Over the past decade we have moved Office from a set of productivity tools to a cloud service across any platform and device. This deal is the next step forward for Office 365 and Dynamics as they connect to the world’s largest and most valuable professional network. In essence, we can reinvent ways to make professionals more productive while at the same time reinventing selling, marketing and talent management business processes. I can’t wait to see what our teams dream up when we can begin working together once the deal closes, which we expect will happen this calendar year. A big part of this deal is accelerating LinkedIn’s growth. To that end, LinkedIn will retain its distinct brand and independence, as well as their culture which is very much aligned with ours. Jeff will continue to be CEO of LinkedIn, he’ll report to me and join our senior leadership team. In essence, what I’ve asked Jeff to do is manage LinkedIn with key performance metrics that accrue to our overall success. He’ll decide from there what makes sense to integrate and what does not. We know that near term there will be no changes in who reports to whom so no reporting relationships at Microsoft will change in that regard. This approach is designed to keep the LinkedIn team focused on driving results while simultaneously partnering on product integration plans with the Office 365 and Dynamics teams. During the integration, we’ll pick key projects where we can go deep together that will ultimately result in new experiences for customers. Kurt DelBene will lead the overall integration efforts at Microsoft in close partnership with Qi Lu and Scott Guthrie. So far, what I’ve learned about the LinkedIn team is how much our cultures share many of the same attributes. We both care deeply about individual and collective growth, and find deep meaning in the work we do to make a difference in our world. Together we’ll do just that. Finally, if you’re not on LinkedIn, join up now and start using and learning more. Satya Source: Microsoft.com |
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Changing the way the world works: Jeff Weiner December 15th, 2008, marked the first day of the best job I’ve ever had.... Never in my wildest dreams, could I have imagined what would happen in the next 7½ years. Our team has grown from 338 people to over 10,000, our membership from 32 million to over 433 million and our revenue from $78 million to over $3 billion. Despite those accomplishments, we’ve only just begun to realise our full potential and purpose: Our mission to connect the world's professionals to make them more productive and successful, and our vision to create economic opportunity for every member of the global workforce. Today’s announcement, that LinkedIn will be combining forces with Microsoft, marks the next step in our journey together, the next stepping stone toward realising our mission and vision, and in remaining CEO of the company, the next chapter in the greatest professional experience of my life. In order to pursue our mission and vision, and to do so in a way consistent with our culture and values, we need to control our own destiny. That, above all else, is the most important rationale behind today's announcement. Long before Satya and I first sat down to talk about how we could work together, I had publicly shared my thoughts on how impressive his efforts were to rapidly transition Microsoft’s strategy and culture. After all, it’s extremely rare to see a company of that scope and scale move so quickly to make fundamental changes. When Satya first proposed the idea of acquiring LinkedIn, he said it was absolutely essential that we had alignment on two things: Purpose and structure. On the former, it didn’t take long before the two of us realised we had virtually identical mission statements. For LinkedIn, it was to connect the world’s professionals to make them more productive and successful, and for Microsoft it was to empower every individual and organisation in the world to achieve more. Essentially, we’re both trying to do the same thing but coming at it from two different places: For LinkedIn, it’s the professional network, and for Microsoft, the professional cloud. Both of us recognised that combining these assets would be unique and had the potential to unlock some enormous opportunities.
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