Microsoft (Nasdaq: MSFT) announced on Monday it would acquire LinkedIn Corp. (NYSE: LNKD) for $26.2 billion in an all-cash deal. Microsoft has agreed to pay $196 per LinkedIn share, a 50 percent premium to LinkedIn’s closing price on June 10. Shares of LinkedIn soared 47 percent to $193 after the announcement.
LinkedIn will retain its distinct brand, culture, and independence, according to a press release by Microsoft. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. The transaction is expected to close this year.
“The LinkedIn team has grown a fantastic business centered 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.”
“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.”
The transaction has been unanimously approved by the boards of directors of both LinkedIn and Microsoft. The deal is subject to approval by LinkedIn’s shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions, said Microsoft.
Microsoft will finance the transaction primarily through the issuance of a new debt. Microsoft expects the acquisition to have minimal dilution (roughly 1 percent) to its earnings per share for the first and second years after closing but expects it to become accretive in the third year.
LinkedIn’s stock had a wild ride over the past one year, declining from its peak of $255 in November 2015. Since then company lost about half its value when it announced disappointing Q4 results and a much weaker than expected outlook in February this year.
Microsoft’s shares fell nearly 4 percent to $49.25 in early trading after the announcement.
Morgan Stanley is acting as an exclusive financial advisor to Microsoft, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Microsoft. Qatalyst Partners and Allen & Company LLC are acting as financial advisors to LinkedIn, while Wilson Sonsini Goodrich & Rosati, Professional Corporation, is acting as legal advisor.
LinkedIn is the world’s largest and most valuable professional network. It has more than 433 million members worldwide, 105 million unique visiting members per month, and 7 million active job listings.
After the announcement, shares of Twitter Inc. (NYSE:TWTR) surged nearly 8 percent as well.