Microsoft and LinkedIn Agree to Historic M&A
- Jun 13, 2016
- Marc Fogarty
7 Ways This Could Reshuffle the Tech Deck
In a cash deal valued at $26.2 billion, Microsoft has agreed to purchase social media giant LinkedIn. The per-share offer of $196 is nearly a 50% premium on LinkedIn’s closing price the day before the deal was announced. According to Bloomberg, the offer values LinkedIn 91 times EBITDA.
The merger has been approved by the boards of both companies and now awaits the green light by regulators. LinkedIn will remain an independent business unit of Microsoft, and LinkedIn’s CEO Jeff Weiner will report to Microsoft CEO Satya Nadella.
The merger offers both companies possible synergies into the consumer and professional markets:
- Microsoft takes a giant step into the social media space with access to LinkedIn’s 430 million-plus members.
- It bolsters Microsoft’s Dynamics customer relationship management software segment. This could make it a strong competitor to market leader Salesforce, who Microsoft was in merger talks with as recently as last year.
- LinkedIn will benefit from Microsoft’s leadership in cloud computing as well as its 1 million customers.
- LinkedIn can become a sales platform for Microsoft products such as Office, Bing, Windows and apps.
- LinkedIn has a leading presence in job recruitment. In fact, the recruitment segment accounted for 2/3 of LinkedIn’s $3 billion in revenues for 2015. There has been some recent slippage here, however.
- LinkedIn’s online learning platform, Lynda.com, could mesh around Microsoft's certification and education initiatives across its product lines.
- It enhances Microsoft’s all-important presence on mobile, with an average of 15 million mobile profile views on LinkedIn daily.
Ultimately, according to the principals involved in the deal, it’s about giving professionals more tools to increase their productivity. If LinkedIn halts the deal, it will have to pay Microsoft a $725 million termination fee.
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Marc Fogarty, Audit Partner and National Biotech Sector Leader, within Technology and Life Sciences Group, and member of the firm's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.
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