The mega-deal dwarfs the Redmond, Wash. software giant's previously largest acquisition, the 2011 purchase of Skype Technologies for $8.5 billion.
Including Skype and the pending LinkedIn deal, Microsoft has made nine billion-dollar acquisitions: Nokia (2013, $7.2 billion), aQuantive (2007, $6.33 billion), Mojang (2014, $2.5 billion), Visio Corporation (2000, $1.375 billion), Navision (2002, $1.33 billion), Yammer (2012, $1.2 billion) and Fast Search & Transfer (2008, $1.19 billion).
LinkedIn Leaders Remain
According to documents filed with the US Securities and Exchange Commission, Jeff Weiner will remain CEO of LinkedIn, reporting to Microsoft CEO Satya Nadella. Weiner and Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, both "fully support this transaction," the documents indicate.
The transaction is expected to close this calendar year, subject to regulatory and shareholder approvals.
Although Mountain View, Calif.-based LinkedIn is significantly smaller than Facebook (1.65 billion users versus 433 million users, respectively), it is still a $3 billion company. It has three main product lines: Marketing Solutions, Talent Solutions and Premium Subs, which includes Sales Solutions and its Lynda.com product line. The 13-year-old company’s total revenue for 2015 was $2.99 billion, up 35 percent from the prior year.
However, LinkedIn has made missteps, too. In February, it had to dump the B2B ad targeting platform it acquired from Bizo for $175 million in 2014. LinkedIn admitted it failed to accurately forecast the resources required to scale the platform.
Marketing Solutions nonetheless accounted for $581 million in 2015, an increase of 28 percent from the year before. LinkedIn has visions of that number nearly doubling to $1 billion by 2017. It's also one of the leaders in the account-based marketing train that's gained heavy steam in the past year.
That's not where I expected MS to drop cash for sure... https://t.co/SLNXLUPalE— Matt Mullen (@MattMullenUK) June 13, 2016
Mobile, Newsfeed Improvements
Microsoft officials today touted several recent LinkedIn moves that made it an attractive buy:
- A new version of its mobile app that has led to increased member engagement
- Enhanced newsfeed to deliver better business insights
- Acquisition of the online learning platform called Lynda.com to enter a new market
- Its rollout of a new version of its Recruiter product to its enterprise customers
Microsoft officials also touted growth such as:
- 19 percent growth year over year (year-over-year) to more than 433 million members worldwide
- 9 percent growth year-over-year to more than 105 million unique visiting members per month
- 49 percent growth year-over-year to 60 percent mobile usage
- 34 percent growth year-over-year to more than 45 billion quarterly member page views
- 101 percent growth year-over-year to more than 7 million active job listings
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said in a statement. “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.”
What a move! Microsoft and LinkedIn merging. This can be so awesome from a product dev and enhancement perspective! https://t.co/1rnQUGtSs1— Brayden Ainzuain (@BraydenAinzuain) June 13, 2016
Weiner said the acquisition combines the Microsoft cloud with LinkedIn’s network to "change the way the world works."
“For the last 13 years," he said, "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 deal doesn't touch some of these tech monster deals but it's no song for sure, rising to the top of Microsoft's list.
LinkedIn has a lot on the table: It will owe Microsoft a termination fee of $725 million if its board of directors withdraws its recommendation of the merger, if it accepts a better offer or if its shareholders reject the offer.
Title image courtesy of Microsoft. Left to right: LinkedIn CEO Jeff Weiner, Microsoft CEO Satya Nadella and Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn.