Microsoft Buys Linkedin For $26.2 Billion

Microsoft is buying social-networking site LinkedIn in an all-cash transaction for $26.2 billion, company officials announced June 13.

The move fits in with Microsoft's increasing push to focus on business customers.

Founded in 2002, Mountain View, Calif.-based LinkedIn had approximately 400 million users in 2015. The company provides a social network alternative for finding professional and work connections, sharing resumes and potentially finding new posts.

In 2015, LinkedIn bought Lynda.com for $1.2 billion to help the company bolster its online learning/training and talent-development capacities.

According to the press release, Jeff Weiner will remain CEO ofLinkedIn, 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, subject to the approval of LinkedIn shareholders.

Many are asking me why Microsoft bought LinkedIn (and why the company paid so much for the company). I admit, I, too am scratching my head.

Microsoft's press release mentions LinkedIn's new version of its mobile app and the enhancement of its newsfeed "to deliver business insights." (Check off buzzwords "mobile" and "insights.) It also mentions Lynda.com as a key asset, as well as LinkedIn's Recruiter product, which targets enterprise customers.

Microsoft bought enterprise social-networking vendor Yammer for $1.2 billion in 2012, and since then has ended up cribbing a number of Yammer technologies in its own Office 365 service. Yammer is one of a number of overlapping technologies from Microsoft that is part of its social-networking portfolio.

Update: Nadella's June 13 email to the troops about the LinkedIn deal sheds a bit more light on management's thinking around the buy. Microsoft officials see LinkedIn fitting in with Office 365, Dynamics CRM/ERP and Microsoft's advertising efforts.

From Nadella's mail:

"How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world. It requires a vibrant network that brings together a professional's information in LinkedIn's public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you're trying to complete. As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow. And in turn, new opportunities will be created for monetization through individual and organization subscriptions and targeted advertising."

Here's the Nadella mail in full:

Team,

I'm excited to share that today Microsoft announced a deal to acquire LinkedIn. You can see how Jeff Weiner, the CEO of LinkedIn, and I envision the opportunity ahead in this public presentation.

This deal brings together the world's leading professional cloud with the world's leading professional network. I have been learning about LinkedIn for some time while also reflecting on how networks can truly differentiate cloud services. It's clear to me that the LinkedIn team has grown a fantastic business and an impressive network of more than 433 million professionals.

Given this is the biggest acquisition for Microsoft since I became CEO, I wanted to share with you how I think about acquisitions overall. To start, I consider if an asset will expand our opportunity -- specifically, does it expand our total addressable market? Is this asset riding secular usage and technology trends? And does this asset align with our core business and overall sense of purpose?

The answer to all of those questions with LinkedIn is squarely yes. We are in pursuit of a common mission centered on empowering people and organizations. Along with the new gr