Microsoft is making a massive bet on social media, announcing Monday it had agreed to acquire LinkedIn for $26 billion in one of the largest deals in technology history.
The all-cash price of $196 per share is a 50% premium to LinkedIn’s closing stock price of $131.08 on Friday and amounts to $250 for every active user of the professional networking site that was founded in 2002. The stock hit a 52-week high of $258 last year but plunged in February after LinkedIn lowered its revenue forecast for 2016.
The deal is the by far largest ever for Microsoft, topping the $8.5 billion it paid in 2011 for Skype. LinkedIn’s shares rose more than 46% to $192.21 in trading Monday while Microsoft was up 2.6%, at $50.14.
“This deal brings together the world’s leading professional cloud with the world’s leading professional network,” Microsoft CEO Satya Nadella told employees in an email, adding that, along with Microsoft’s Office 365 commercial and Dynamics businesses, it was “key to our bold ambition to reinvent productivity and business processes.”
“How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world,” he said.
The BBC said the merger “is meant as a powerful signal of where Satya Nadella is now taking Microsoft. He sees its future as a cloud computing business providing all sorts of professional services to clients — including a social network to connect them to each other.”
LinkedIn has 433 million users worldwide and more than 7 million active job listings. The recruitment business accounted for $2 billion of its $3 billion in revenues in 2015.
“Today is a re-founding moment for LinkedIn,” chairman Reid Hoffman said in a news release. “I see incredible opportunity for our members and customers and look forward to supporting this new and combined business.”
Gregory Sichenzia, a partner at securities law firm Sichenzia Ross Friedman Ference, said the companies will breathe new life into each other.
“Microsoft will be a terrific partner that can grow LinkedIn in ways it couldn’t grow itself, and having LinkedIn puts Microsoft at the level of a younger, hipper, more socially relevant company,” he told the Los Angeles Times.