Microsoft Buying LinkedIn

Microsoft announced that they are buying LinkedIn for $26.2 billion in an all-cash transaction. LinkedIn will retain its distinct brand, culture and independence according to their press release. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction. The transaction is expected to close this calendar year.

"I've always had a great admiration for LinkedIn and what Reed, Jeff and the team here have built," stated Nadella. "I'm a user on LinkedIn, I'm a publisher on LinkedIn and as I've thought about it more in terms of what is it that is most needed in today's world I'm a great believer in productivity tools and communication tools because that's what empowers people to be able to be great at their job. Think about taking that and connecting it with the professional network and really having that entirety of what is your professional life be enhanced, be more empowered. acquiring new skills and being more successful in your current job and finding a greater and bigger next job. That's that vision, and I've been talking with Reed and Jeff for a while and the fact that it has came together now is fantastic."

"When we started to get into serious discussions, Satya and I, during that first meeting he said we have to ensure that their is alignment in two key areas, one is Purpose and the other is Structure," stated Weiner. "It was after the Purpose discussion and starting to riff and brainstorm on all the things we can do together, where there was a lot of excitement. It's not about sitting back and reacting to this. Satya has said time and time again you guys have to write the rules here. We're going to do this differently, we have the shared sense of alignment. So let's dream big and think about what's possible and that's going to be first principal."

Microsoft to acquire LinkedIn. https://t.co/ijfD6gZmiB pic.twitter.com/ChUbNT0eSX

— Microsoft (@Microsoft) June 13, 2016

Per the Microsoft Announcement:

LinkedIn is the world’s largest and most valuable professional network and continues to build a strong and growing business. Over the past year, the company has launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn newsfeed to deliver better business insights; acquired a leading online learning platform called Lynda.com to enter a new market; and rolled out a new version of its Recruiter product to its enterprise customers. These innovations have resulted in increased membership, engagement and financial results, specifically:

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

“The LinkedIn team has grown a fantastic business centered 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 organization on the planet.”

“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,” 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 Directors of both LinkedIn and Microsoft. The deal is expected to close this calendar year and is subject to approval by LinkedIn’s shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions.

“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 Hoffman. “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.”

Microsoft will finance the transaction primarily through the issuance of new indebtedness. Upon closing, Microsoft expects LinkedIn’s financials to be reported as part of Microsoft’s Productivity and Business Processes segment. Microsoft expects the acquisition to have minimal dilution of ~1 percent to non-GAAP earnings per share for the remainder of fiscal year 2017 post-closing and for fiscal year 2018 based on the expected close date, and become accretive to Microsoft’s non-GAAP earnings per share in Microsoft’s fiscal year 2019 or less than two years post-closing. Non-GAAP includes stock-based compensation expense consistent with Microsoft’s reporting practice, and excludes expected impact of purchase accounting adjustments as well as integration and transaction-related expenses. In addition, Microsoft also reiterated its intention to complete its existing $40 billion share repurchase authorization by Dec. 31, 2016, the same timeframe as previously committed.

Jim Cramer of CNBC gives his take on the deal below:

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