Microsoft Corp will buy LinkedIn Corp. for US $ 26.2 billion

LinkedIn

Microsoft Corp will buy LinkedIn Corp. for US $ 26.2 billion. The purchase plan is the largest corporate action in the technology sector. The acquisition plan encourages LinkedIn shares rose while Microsoft declined earlier this week.

LinkedIn

In trading on Monday (Tuesday morning GMT), LinkedIn shares jumped 47 percent to US $ 192.21 New York time. LinkedIn shares rise the most since 2011. Shares of LinkedIn has slumped 42 percent this year as investors began to doubt the company’s future prospects.

Meanwhile, Microsoft shares fell 2.6 percent to US $ 50.14 in first this week. Twitter shares too jumped on speculation that Twitter will become the next acquisition target. Twitter shares rose 3.8 percent to US $ 14.55.

LinkedIn stock purchases represented the purchase of approximately US $ 196 per share. The share price is quite premium with an increase of almost 50 per cent of the market value of LinkedIn shares at the close of trading last Friday. However, the figure is still below the social media of the highest shares in the range of US $ 270.

LinkedIn share purchase was considered a bold step undertaken Microsoft CEO Satya Nadella is trying to make the company’s software to continue to lead in next-generation computing.

By connecting the software Microsoft Word and PowerPoint with your LinkedIn network of approximately 433 million professionals who can add to make the combination of sales, marketing and recruitment services as its core business products. This is potentially a challenging competitor cloud software like Salesforce.com.Inc future.

“LinkedIn and Microsoft share a mission of helping people to work more efficiently. There is no better way to achieve that mission than to connect professionals in the world,” said Microsoft CEO Satya Nadella.

Meanwhile, Chief Financial Officer (CFO) Microsoft Amy Hood said LinkedIn’s stock purchases will be financed by debt. It is also as a way to reduce the tax bill. The Company had funds of approximately US $ 105 billion in cash and other liquid assets.

Microsoft also said LinkedIn CEO Jeff Weiner will remain in his position in the company. Microsoft also will operate LinkedIn as a separate unit, and retains its name.

Nevertheless, the agreement would require approval from regulators United States (US), European Union, Canada and Brazil. In the process of this stock purchase, Microsoft assisted by Morgan Stanley. While financial advisor LinkedIn by Allen and Company LLC and Qatalist Partners.

Corporate action plan of this technology is considered to provide optimistic than one mega corporate mergers to succeed. “It’s a big growth for Microsoft,” said Forrester analyst Ted Schadler.

Morningstar analyst Rodney Nelson assess LinkedIn stock purchases by Microsoft can deliver new services and products that are useful for workers and the role of human resources (HR) going forward.

While Madrona Ventures Portfolio Manager Matt Mcllwain said that Microsoft buy LinkedIn as an opportunity to take advantage of the capabilities of each and combine to produce something strong and complementary.

“The future of productivity around people, identities, data and relationships between them,” said Mcllwain.

On the other hand there are also analysts pessimistic about the impact of the purchase of shares LinkedIn by Microsoft. Scott Kessler, an analyst at S & P Global Capital said that large transactions were also still requires work to be done.

Microsoft will use LinkedIn as a database of information professionals and distribution channels for software systems. While LinkedIn gain additional financing and access to millions of people, potentially combining networks.

Microsoft noted that the agreement would help the large increase in new customers. The total potential productivity of Microsoft’s market reached US $ 315 billion, up from US $ 200 billion without LinkedIn.

Not only that, for Microsoft, LinkedIn agreement into an opportunity to reverse a poor track record of acquisitions, including paying US $ 9.4 billion of HP manufacturer Nokia in 2014, and the business network Yammer approximately US $ 1.2 billion in 2012. In addition, Skype for US $ 8.5 billion.