Microsoft has always been bold enough in mergers and acquisitions, this time to reach LinkedIn.
It is worth mentioning that this is the biggest M&A action Microsoft has made after the current CEO of Microsoft, Satya Nadella, took off in February 2014.
For more than two years before, Nadella has been busy cleaning up the mess of his predecessor, Steve Ballmer.
Previously, Ballmer was in charge of Microsoft, and Microsoft announced in September 2013 that it would acquire Nokia's mobile phone business for $7.2 billion. Nadella seems to have been dissatisfied with Nokia's business. According to industry sources, when former Microsoft CEO Steve Ballmer decided to acquire Nokia, he was opposed by many directors and executives. Nadella, the current CEO, is one of them. As a result, after Nadella took office, Microsoft continued to lay off a large number of large-scale layoffs on Nokia and mobile phone business, and the latest action was to sell the Nokia's feature phone business to Foxconn for $350 million, and to re-intelligently The personnel of the mobile phone hardware business is moving the "knife".
This time, Nadella, who is not soft on the "small bag", shows that he is equally powerful in major mergers and acquisitions.
Compared to Nokia’s $7.2 billion acquisition, this time the acquisition of LinkedIn, Microsoft opened a “high price†of $26.2 billion, equivalent to 3.6 Nokia. In terms of transaction amount, this is the largest acquisition transaction in Microsoft's history.
The question that comes with it is that it costs a lot of money to buy LinkedIn. What is Microsoft doing?
For LinkedIn, it’s been a long time.
Although close to the early morning of June 14th, Beijing time, Microsoft announced that it would buy the professional social networking site LinkedIn for $26.2 billion in cash, but Microsoft's interest in LinkedIn has been around for a long time.
Prior to this, Microsoft has repeatedly tried to acquire LinkedIn.
BI has reported that Microsoft has opened a price of 500 million US dollars, although it is close to reaching an agreement, but ultimately fell through. In the months before the LinkedIn IPO, Microsoft gave the latest offer of nearly $2 billion, but at the last moment, Hank Vigil, vice president of Microsoft strategy and cooperation at the time, temporarily gave up the decision. The plan that led to the final acquisition of LinkedIn went bankrupt. Today, Microsoft, which missed the opportunity, had to acquire LinkedIn 10 times higher than it was then.
However, this time Microsoft and Linkedin seem to have gotten their wish.
Nadella’s e-mail to employees of the company on the acquisition of Linkedin shows that LinkedIn CEO Jeff Weiner will remain CEO of LinkedIn, and the brand, culture and independence of LinkedIn will be preserved.
“Actually, what I have asked Jeff to do is to manage LinkedIn based on the key performance indicators that have brought us to our overall success. Then he will decide what to integrate and what makes sense. We know that there will be no change in who will report to anyone in the near future. In this regard, Microsoft's internal work reporting relationship will not change," Nadella explained in the above public email.
According to public information, LinkedIn was founded in 2002 by former PayPal member Reed Hoffman and listed on the NYSE in 2011. The number of LinkedIn members has exceeded 300 million worldwide. Currently, it is established in 27 cities around the world. Branches and offices. Reed Hoffman said in a statement yesterday: "Today is a time of rebirth for LinkedIn." LinkedIn's global vice president and president of China, Shen Boyang, subsequently confirmed the news and said, "This is the largest in the history of technology. One of the acquisitions. LinkedIn plus Microsoft, the imagination is unlimited. LinkedIn China will continue to maintain independent development, while gaining more resources to support the mission of connecting the global workforce."
After the announcement of the acquisition, LinkedIn's share price surged, closing up 46.64%, to 192.21 US dollars, with a total market value of about 25.7 billion US dollars. Microsoft closed down 2.60% to $50.14, with a total market capitalization of about $394 billion.
Microsoft fights social networks again
According to Nadella, the most direct impact of this acquisition on Microsoft is Microsoft Office 365 commercial business and Dynamics business, using a vibrant social network to bring information about a professional on the LinkedIn network to Office. 365 is combined with information on Dynamics.
“The question I am considering is whether an asset will expand our opportunities – especially, can this asset expand our overall addressable market? Can this asset harness long-term use and technology trends? Does the asset fit our core business and overall mission?†In Nadella’s view, the acquisition of LinkedIn provides answers to all of the above questions.
Behind this is Microsoft’s ambition to remain undead on social networks.
For this acquisition, the biggest voice from the industry is that Microsoft has started to get involved in social networks through the acquisition of LinkedIn. Although LinkedIn does not have enough influence to compete with Facebook and Twitter, its 433 million users can't be underestimated.
The tech site Techcrunch posted an article commenting that it was a win-win deal, arguing that Microsoft could use the deal to incorporate a core, currently unowned business into the company's strategy to provide a broader range of services. In terms of social networking services and professional content, LinkedIn will make Microsoft's services more comprehensive. In addition, LinkedIn's social network will also give Microsoft a potential sales channel.
Microsoft CEO Satya Nadella and LinkedIn CEO Jeff Weiner and other executives intervened in an analyst conference call after the announcement of the merger to interpret the considerations behind the deal.
Nadella said that the confidence to remain optimistic about the deal is the business prospects of the combination of Office 365, LinkedIn and Dynamics. “The cloud computing business is the most powerful area of ​​our momentum. If we add the assets of cloud computing brought by LinkedIn, it will not only bring about an increase in services, but also a strong service network, which will bring us The best long-term cash opportunities."
It is worth mentioning that LinkedIn's share price plummeted in February this year. The social network for professionals has plummeted 40% in one day and the market value has shrunk by $10 billion.
And Weiner expressed confidence in the company's growth recovery acceleration, thanks to Microsoft's deep-rooted position in the existing market, the merger of the two companies can expand the company's existing business and market, can bring more value and have the opportunity Reduce customer churn.
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