Software giant Microsoft is to buy social media firm LinkedIn for $26.2 billion (£18.5bn) in a blockbuster deal to catapult it into the professsional networking sector.
The surprise takeover unveiled yesterday is by far the biggest acquisition in Microsoft’s history, overshadowing the US major’s swoop for internet phone service Skype for $8.5bn in 2011 and its $7.2bn deal for Nokia’s devices business in 2014.
Shares in LinkedIn – a platform where users can network with fellow professionals, upload CVs and search among more than seven million advertised jobs – soared 47 per cent on the New York Stock Exchange yesterday. Microsoft shares fell 3 per cent in early trading.
The tie-up comes after LinkedIn saw close to $11bn wiped off its market value in February when shares plunged more than 43 per cent after its revenue forecasts came in below analyst expectations.
But LinkedIn’s membership has risen 19 per cent over the past year to 433 million, with 105 million unique visits a month, some 60 per cent of which are made via mobile devices.
Analyst Martin Garner of CCS Insight said the move would give Microsoft “access to the world’s biggest professional social network – a worldwide platform with a position that Microsoft could not have built itself”.
Microsoft chief executive Satya Nadella said: “The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals. 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.”
Under the deal, which is backed by LinkedIn controlling shareholder Reid Hoffman, the company’s chief executive Jeff Weiner will remain in his post, reporting to Nadella.
Weiner said: “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.”
In an email to LinkedIn employees, Weiner asked them to give themselves “some time to process the news.”
He said: “You might feel a sense of excitement, fear, sadness, or some combination of all of those emotions. Every member of the exec team has experienced the same, but we’ve had months to process.
“Regardless of the ups and downs, we’ve come out the other side knowing beyond a shadow of a doubt, this is the best thing for our company.”
The deal values LinkedIn at $196 per share – a premium of 50 per cent on its closing price on Friday – and is expected to complete before the end of the year, subject to approval by regulators and the social network’s shareholders.
Following the news, analysts at Saxo Bank speculated that Google may try to buy Twitter by the end of this year.