A surprising move was taken by Microsoft when it acquired LinkedIn for $26.2 billion on Monday. After this announcement took place the shares of LinkedIn surged by 47 percent. Both the boards have approved of this transaction but still some of the approvals are awaited. This deal is expected to get closed in this calendar year. Even after this acquisition, LinkedIn will retain its distinct brand, culture and its independence.
LinkedIn is known to be world’s one of the most valuable professional networks and hence continues to build a strong growing business. Microsoft also has more than one billion office users but when we talk about a social graph, Microsoft has none. Hence, it had to rely on Facebook, LinkedIn and others to provide that key connections. LinkedIn is the ultimate business social platform. It has everybody on it, from interns and college students on up to the biggest CEOs.
With this acquisition LinkedIn provides Microsoft with about 433million members and a very solid social graph. This will help Microsoft reach a far bigger audience in terms of social networking services and professional content. The plan is a big one from both the sides.
Analysts have also speculated that Microsoft may also buy Salesforce.com as a cloud play.
Microsoft will finance the transaction primarily through the issuance of new indebtedness. Microsoft expects the acquisition to have minimal dilution of approximately 1% 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 fiscal year 2019, or less than two years post-closing.
A joint conference call with the investors will be further hosted by LinkedIn and Microsoft to discuss this transaction. Microsoft has all the resources, the cash, the balance sheet and the borrowing ability to acquire a lot more.