Microsoft to buy professionals' network LinkedIn for $35.6b

The logos of Microsoft and LinkedIn pictured in Taipei, Taiwan, on June 13. Microsoft has agreed to buy LinkedIn for US$26.2 billion (S$35.6 billion).
The logos of Microsoft and LinkedIn pictured in Taipei, Taiwan, on June 13. Microsoft has agreed to buy LinkedIn for US$26.2 billion (S$35.6 billion). PHOTO: EPA

WASHINGTON • Microsoft has agreed to buy LinkedIn for US$26.2 billion (S$35.6 billion), in its biggest deal, combining the software giant's fast-growing cloud services business with the world's largest online network for professionals.

Microsoft's offer of US$196 per share represents a premium of 49.5 per cent over LinkedIn's closing price last Friday.

LinkedIn will retain its brand, culture and independence, and Mr Jeff Weiner will remain as chief executive officer, Microsoft said in a statement yesterday.

 

The offer values LinkedIn about 91 times earnings before interest, taxes, depreciation and amortisation, according to data compiled by Bloomberg.

That is the highest multiple of any takeover valued at more than US$5 billion this year, the data showed.

The deal is the largest under the tenure of Microsoft CEO Satya Nadella, who has been reshaping the company since taking over in 2014 to appeal more to business customers with cloud-based services and productivity tools.

LinkedIn is not an obvious fit in the ongoing restructuring, but gives Microsoft the biggest global social network for professionals that is used by job seekers, recruiters and human resource teams.

In a statement, Mr Nadella said the acquisition could drive growth for LinkedIn as well as Microsoft's Office 365 and Dynamics services.

"Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn's network, now gives us a chance to also change the way the world works," Mr Weiner said in the statement.

LinkedIn, which enables members to connect with similar-minded professionals and facilitates job hunting, has some 433 million members worldwide. But LinkedIn in the past quarter reported a loss of US$46 million and a US$166 million loss for last year, which resulted in its shares falling to multi-year lows early this year.

Mr Nadella, in an e-mail to staff, said the deal reflects Microsoft's new focus on cloud computing and services. "We are in pursuit of a common mission centred on empowering people and organisations," he said.

He added that the 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".

LinkedIn, which calls itself "the world's largest and most valuable professional network", has been seeking to expand its offerings with more messaging and mobile applications, and revamped its newsfeed to help boost engagement.

LinkedIn shares surged 49 per cent in pre-market trading in New York to US$194.63. Microsoft fell 3.7 per cent to US$49.60.

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on June 14, 2016, with the headline 'Microsoft to buy professionals' network LinkedIn for $35.6b'. Print Edition | Subscribe