Microsoft Corp. and LinkedIn have announced entering into a definitive agreement under which Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash. We take a close look at the deal and how it would affect consumers.
The deal has been enthusiastically hailed by Microsoft’s co-founder Bill Gates as an opening to build a business network for professionals like Facebook Inc. has done for social networking.
According to the announcement made on June 13, LinkedIn will retain its distinct brand, culture and independence. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft.
The deal has been enthusiastically hailed by Microsoft’s co-founder Bill Gates as an opening to build a business network for professionals like Facebook Inc. has done for social networking.
Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction. The transaction is expected to close this calendar year, Microsoft said in a release.
LinkedIn is the world’s largest and most valuable professional network and continues to build a strong and growing business.
Over the past year, the company has launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn newsfeed to deliver better business insights; acquired a leading online learning platform called Lynda.com to enter a new market; and rolled out a new version of its Recruiter product to its enterprise customers.
These innovations have resulted in increased membership, engagement and financial results. It saw 9% growth year over year (YOY) to more than 433 million members worldwide.
It also recorded 9% growth over the same period to more than 105 million unique visiting members per month; 49% growth to 60% mobile usage;
34% growth to more than 45 billion quarterly member page views; 101% growth to more than 7 million active job listings.
“The LinkedIn team has grown a fantastic business centred on connecting the world’s professionals,” Nadella said.
“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,” he added.
Weiner, on his part, said, “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,” Weiner said.
“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,” he added.
The transaction has been unanimously approved by the Boards of Directors of both LinkedIn and Microsoft. The deal is expected to close this calendar year and is subject to approval by LinkedIn’s shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions.
That much for the business deal part. How would it affect the professionals who use either of the services?
One way of looking at it is the role played by Cortana, Microsoft’s digital assistant, who at present is able to give basic information or remainders about appointments, pending tasks and the like. In the near future, it could provide details not only about business relationship, but all the information that could be used to form a more personal connection with business associates, colleagues and clients.
Microsoft already is able to access a lot of personal data about its users through the calendar (Outlook), meetings (Outlook), co-workers (Delve), accounts (Microsoft Dynamics CRM), and also areas of expertise (Delve). Microsoft calls it the Office Graph.
LinkedIn has a so-called Economic Graph, digital information about every employee and their resume, a digital record of every job that’s available, as well as every job and even every digital skill necessary to win those jobs. It also owns Lynda.com, a training network that enables users to join classes to learn those skills. With the LinkedIn news feed, the user is able to keep tabs on co-workers from a social perspective as well.
Thus when both these graphs are brought together, Microsoft could use the LinkedIn information to add more value from the user point of view to applications like Delve, already part of Office 365. It would also be able to sell more Office 365 subscriptions, specifically to enterprises and small businesses. It could also sell Lynda training subscriptions along with it.
According to Microsoft figures, there are around 1.2 billion Office users, and 70 million Office 365 monthly users in business. If the 433 million who have already signed up for LinkedIn (though only 105 million actively use it in a month) added, it would result in adding more power to the service. (with inputs from pcworld.com and micrsoft.com)
