Microsoft is buying LinkedIn in an all-cash transaction valued at $26.2 billion (£18.4bn) (at $196 (£138) per share). LinkedIn will continue to operate independently and will retain its brand after the acquisition. LinkedIn CEO Jeff Weiner will report to Microsoft CEO Satya Nadella following the acquisition. The transaction is expected to be finalised by the end of this year.
The news was announced on Monday morning and sent LinkedIn stock soaring about 50 per cent immediately following the announcement. The acquisition is one of the most valuable in Microsoft history.
Twitter shares also spiked by as much as 5 per cent following the news that Microsoft is acquiring LinkedIn. As a possible acquisition target, Twitter benefited by the news, which is seen as signal that mergers and acquisitions could be picking up again in Silicon Valley.
Microsoft’s acquisition of LinkedIn will strengthen the company’s connection to the professional world, where it has made a large majority of its wealth. In the past few decades, Microsoft has been able to lean heavily on the business world by selling licenses to its products like Microsoft Office and the Windows operating system.
LinkedIn will add a similar value to those by giving Microsoft ownership over a network of more than 433 million professionals, many of whom pay subscriptions to use the service.
The acquisition comes in the wake of a major LinkedIn data breach, where more than 117 million passwords were hacked and sold on the black market. The hack was particularly notable because even high-profile users like Mark Zuckerberg were compromised in the data breach. In total, the hack affected about a quarter of the company’s 433 million members.
In October 2015, LinkedIn reported that it had more than 400 million cumulative members, but active users only made up about one quarter of its total memberships. That tepid outlook led to LinkedIn shares falling 43 per cent in February.
In April 2015, LinkedIn purchased online learning company Lynda.com for $1.5 billion (£1.05bn). The purchase was justified because both services try to help professionals get better at what they do. It’s still unclear what Microsoft plans to do with the Lynda.com purchase.