LinkedIn Surged On Microsoft Acquisition Bid

Microsoft Corporation (NASDAQ: MSFT) announced on Monday it has reached a deal to acquire LinkedIn Corp (NYSE: LNKD), the professional social network company, for $26.2 billion in cash. Shares of LinkedIn jumped up 47.40% to $193.15 on Monday morning while Microsoft down 2.55% to $50.17.

“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Satya Nadella, Microsoft’s chief executive, 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,” Jeffrey Weiner, LinkedIn’s chief executive, 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.”

Microsoft believes the combination will expand the market for both LinkedIn and Microsoft’s Office products. The company has made a significant push in the past few years to make its products more connected and wants to use data to make them more bright. LinkedIn’s vast network offers data which could help.

LinkedIn went public in May 2011 at $45 per share in the biggest internet IPO since Google Inc.’s debut in 2004, and its stock more than doubled on its first day of trading. Shares of LinkedIn peaked approximately $270 in February 2015 but have since lost about half their value as the company forecast a much weaker-than-expected 2016 as it shifts gears on its advertising strategy.

Microsoft has made a number of big acquisitions in recent years. Among them was its problematic $9.4 billion buy of Nokia Corp’s mobile phone business, most of which has been written off. The company also spent $8.5 billion in 2011 to buy Skype SARL, the provider of voice and video chats, and $2.5 billion in 2014 for Mojang AB, the maker of the “Minecraft” videogame.

LinkedIn’s core Talent Solutions business is focused on recruitment advertising, which made up two-thirds of its $3 billion in revenues in 2015. The company has a presence in over 200 countries, and approximately 105 million people use its platform every month. They have roughly 433 million registered users, and has a strong mobile presence as well, with about 60% of its traffic coming via mobile devices. The company also has at least 7 million active job listings, making it one of the biggest collection of job listings in the world.

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