Microsoft Corp agreed to buy LinkedIn Corp for $26.2 billion in its biggest-ever deal, combining the software giant's fast-growing cloud services business with the world's largest online network for professionals.
The offer of $196 per share represents a premium of 49.5 per cent to LinkedIn's Friday closing price.
LinkedIn's shares jumped 48 per cent to $194.28 before the opening bell on Monday. Microsoft's shares were down 3.3 per cent.
“Today is a re-founding moment for LinkedIn,” Reid Hoffman, chairman of LinkedIn's board, said in a statement.
Jeff Weiner will remain chief executive of LinkedIn, reporting to Microsoft CEO Satya Nadella. “I have always had a great admiration for LinkedIn,” Nadella said in a video on Microsoft's website. “I have been talking with Reid and Jeff for a while ... I have been thinking about this for a long time.”
The deal is expected to close in 2016, the companies said in a joint statement.
Microsoft said it would issue new debt to fund the deal. After the deal, LinkedIn will become part of Microsoft's productivity and business processes unit.
“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,” Weiner said.
Microsoft will finance the transaction primarily through the issuance of new indebtedness. Upon closing, Microsoft expects LinkedIn’s financials to be reported as part of Microsoft’s Productivity and Business Processes segment.
In addition, Microsoft also reiterated its intention to complete its existing USD 40 billion share repurchase authorisation by December 31, 2016, the same timeframe as previously committed.
LinkedIn has more than 9,700 full-time employees and is headquartered in Mountain View, California. It has offices in 30 cities, including Bengaluru, Beijing, Chicago, Dubai, Dublin, Hong Kong and London.
Morgan Stanley acted as exclusive financial advisor to Microsoft and Simpson Thacher & Bartlett LLP was the legal advisor to Microsoft.
Qatalyst Partners and Allen & Company LLC are acting as financial advisors to LinkedIn while Wilson Sonsini Goodrich and Rosati, Professional Corporation, is acting as legal advisor.