Microsoft Commences LinkedIn Acquisition at 26.2B
Yesterday, Microsoft has signed off on a deal to purchase the LinkedIn Corporation. At $196 per share, the price settlement arranged by Microsoft CEO Satya Nadella is valued at 26.2 billion, a 50 percent premium of LinkedIn’s final closing offer. With the LinkedIn acquisition being one the most expensive technology-industry deals in history, Nadella is obligated to appeal to his shareholders as to what benefit this acquisition presents in terms of revenue, and how they plan to make a return on their investment in the future.
In the immediate aftermath of this news, LinkedIn (NASDAQ: LNKD) saw a 47 percent increase in stock value, while Microsoft (NASDAQ: MSFT) saw a 7 percent decrease, a diminish of 30 billion in their market value. Understandably, these fluctuations mirror the confidence of investors in the deal from both ends: From the perspective of a shareholder of LinkedIn, this solidifies the company’s future, vastly expanding the available network from which to promote the service as well as absolving any immediate doubt as to the corporation’s revenue growth prospects, in wake of their February 44 percent market devaluation crisis. On the other hand, from the perspective of a Microsoft shareholder, the deal comes at perhaps an over-valued cost with little assurance of a financial return path in the near future. Microsoft has significantly less to gain, most prominently a social media source of over 433 million active members for which to integrate into, more readily appealing to their professional users worldwide.
Microsoft has expressed that it does not intend to exercise ubiquitous control over the LinkedIn Corporation, as LinkedIn will retain its distinct brand, culture and independence. Jeff Weiner will remain CEO and report to Microsoft CEO Satya Nadella, and will join the Microsoft Senior Leadership Team. By merit of the resources gained from the LinkedIn acquisition deal, Weiner’s goal for the company is to continue to provide an essential resource for professionals to find employment opportunities in an increasingly technology integrated world. The most immediate concern is to provide a strong enough resource in LinkedIn to compete with projections of job displacement due to technology by 2020.