Microsoft’s planned $26.2 billion acquisition of professional networking site LinkedIn is one of the biggest technology deals we have seen in recent years. And after LinkedIn’s somewhat weak earnings outlook earlier this year that sent its stock tumbling in February, the all-cash transaction is the most excitement Silicon Valley has seen recently. Here are five facts surrounding this transaction:
1. The deal marks the biggest acquisition by Microsoft, following its $8.5 billion acquisition of Skype in 2011, and $7.2 billion price tag for Nokia’s phone business in 2013.
2. Microsoft is paying $196 per share, which carries a premium of about 50 per cent on LinkedIn’s last closing share price on Friday on the New York Stock Exchange (NYSE). On Monday, LinkedIn’s shares surged nearly 50 per cent after the announcement of the deal.
3. Microsoft is making a huge bet on cloud computing with this deal. Cloud computing is an industry term for internet-based businesses. Microsoft plans to tap its cloud-based office productivity suite, Microsoft Office 365, and its CRM business, Dynamics, combining it with the data of LinkedIn, according to a company statement. In a letter to employees, Microsoft CEO Nadella said of the potential benefits, “This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete.”
4. LinkedIn, founded in 2002, has 433 million members worldwide; Asia accounts for over 92 million of its users. The company will operate as a separate entity and brand, similar to Instagram post its acquisition by Facebook. Jeff Weiner, will remain the CEO of LinkedIn and will report to Microsoft CEO Satya Nadella.
5. Microsoft will finance the deal through debt. Should the deal not close as expected, LinkedIn will be required to pay Microsoft a deal break-up fee of $725 million, according to the company’s regulatory filings.
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