Microsoft buys LinkedIn for $26.2 Billion and raises the stakes in the tech sector. The acquisition will enable it to expand its presence in mobile and on social media in the battle against other tech giants like Facebook and Google.
The news came on June 13: Microsoft bought LinkedIn, the popular social media site dedicated to professional networking, for the pretty sum of $26.2 Billion, the group’s largest acquisition to date.
The sale, approved by both boards of directors, is expected to close by the end of the year. Microsoft also released a statement saying that LinkedIn, which remains under the leadership of CEO Jeff Weiner, "will retain its brand, its culture and its independence."
Analysts are saying that Microsoft was looking to forget its unfortunate series of recent acquisitions, aiming to compete with Google on its own turf: this includes Nokia and Skype, which drastically declined following its acquisition.
In addition to playing catch up, Microsoft’s CEO Satya Nadella is probably hoping to accelerate the business' transition towards cloud computing services.
At least, that was the intention of the 'mission statement' sent to Microsoft employees in 2014. "By becoming the reference company for all things mobile and cloud, we will reinvent productivity and return power to every individual and every organization on the planet."
Mutual benefits
Microsoft has the particular challenge of addressing companies first, namely through Microsoft Office 365. During the announcement, Nadella again defended the relevance of having "tools that improve performance and communication at work."
However, as professor and analyst Mike Wade points out, Microsoft “neither has a strong mobile nor social media presence."
This is why LinkedIn becomes a company of interesting: the Californian company, serving 433 million members worldwide and providing a library of 7 million jobs, is used up to 60% of the time through its mobile platform.
That being said, the acquisition also serves the interests of LinkedIn. As explained Mike Wade in his analysis, “LinkedIn has long been criticized for not maintaining its growth in terms of users and revenue. These criticisms were justified. LinkedIn has just began understanding the tremendous leverage its enormous pool of professionals has and it is now moving beyond the simple role of being a job search engine. Ideally, Microsoft will help grow its base of 400 million users."
Headquartered in Silicon Valley, LinkedIn was founded in 2003 by Reid Hoffman and his partners. The company has sales revenue of $3 Billion (2015) and employs 9,200 people (2015).
Microsoft, which had its first heyday under the leadership of Bill Gates, is a multinational company that develops operating systems and software, among others. Its sales revenue is around $93 Billion and the company employs 118,000 employees worldwide.
See also:
LinkedIn: 5 reasons why the acquisition of LinkedIn is a great move for Microsoft