Microsoft to buy LinkedIn for US$26bn

By Jonathan Nally
Tuesday, 14 June, 2016

Ms linkedin 2016 06 12 1 c carousel

Microsoft has announced plans to buy business-focused social site LinkedIn for a whopping US$26.2 billion, including the latter’s cash, in a deal that values LinkedIn shares at US$196.

In a joint statement, the companies said that “LinkedIn will retain its distinct brand, culture and independence”.

LinkedIn CEO Jeff Weiner will remain on board, and will report to Microsoft’s CEO, Satya Nadella.

“The LinkedIn team has grown a fantastic business centred 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 organisation on the planet.”

According to figures released in the statement, LinkedIn has experienced:

  • 19% growth year over year (YOY) to more than 433 million members worldwide;
  • 9% growth YOY to more than 105 million unique visiting members per month;
  • 49% growth YOY to 60% mobile usage;
  • 34% growth YOY to more than 45 billion quarterly member page views;
  • 101% growth YOY to more than 7 million active job listings.

“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,” LinkedIn’s 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 both companies.

“Today is a re-founding moment for LinkedIn. I see incredible opportunity for our members and customers and look forward to supporting this new and combined business,” said Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn.

“I fully support this transaction and the board’s decision to pursue it, and will vote my shares in accordance with their recommendation on it.”

Professor Mark Skilton, Professor of Practice in the Information Systems & Management Group at Warwick Business School, said that the “acquisition makes sense in respect of Microsoft’s link with enterprise in its cloud platform and portfolio of enterprise business services; it will help Microsoft build out its enterprise services capabilities”.

“The long-running rumours of LinkedIn not being able to develop any new growth strategies, with its net income falling year-on-year from 2011, have finally come home to roost with the Microsoft acquisition of $26bn in cash,” Skilton added.

Skilton said that while LinkedIn has grown a user base of 106 million active users, compared to 310 million active Twitter users and 1.65 billion Facebook monthly users, it has not managed to grow its commercial services in what could have been a strong enterprise market.

“LinkedIn makes two-thirds of its income from talent solutions in recruiting and job market services that define it, and the remainder in selling marketing solutions and premium subscriptions,” said Skilton.

“It has remained the website to go to for professional networking.”

Pictured (l-r): Jeff Weiner, Satya Nadella and Reid Hoffman.

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