LinkedIn is a small company compared to Facebook, and the stock had fallen out of favor after a cautious outlook earlier this year. The stock plummeted more than 40% in just one single day in February this year.
That was then. Now, the went straight up on good news, and the stock skyrocketed 46% in one day. Investors jumped in on the news on monday. Microsoft announced that it has agreed to acquire the professional networking platform in an all-cash deal worth $26,2 billion.
Microsofts CEO Sataya Nadelia said The deal would «bring toghether the worlds leading professional cloud with the worlds leading professional network», and LinkedIns CEO Jeff Weiner will remain at the helm of the social network.
Microsoft is paying $196 a share for LinkedIn.
What company could be better than LinkedIn in terms of their position and opportunity for growth? The price Microsoft paid was fair, and this acquisition will make LinkedIn more valuable under Microsoft`s umbrella than a standalone company.
Microsoft is still one of the worlds biggest companies, and this acquisition was brilliant. Its not difficult to see what Sataya Nadelia is thinking. He will probably integrate LinkedIn into Microsoft Office 365 and Dynamics.
Marketers and professional networks will still use the platform and integrate it in their sales process. They will be more willing to pay for training and to keep on building marketing campaigns their new CRM.
Microsoft will improve the Dynamics CRM software and Office 365 enterprice offerings, and there is no doubt that Microsoft is interested in more market shares in the CRM business. They want to build out their Customer Relationship Management to compete with Salesforce.
A few weeks ago, Microsoft was the first bidder for Marketo which is part of the automated marketing space. And they have enough cash to buy them all. But they are not interested to spend some cash on this acquisition. They will make a loan to avoid a 35 percent tax bill.
Just like Apple last year. They have $180 billion overseas, but borrowed $6,5 billion to pay shareholders a dividend. We still have low rates, and that`s why we have seen a huge activity in M&A recently.
It would be stupid not to do that.
Many big tech companies have a lot of cash. Alphabet Inc, Apple, Microsoft and Facebook have hundreds of billions of dollars in cash and you can imagine their opportunities in the future. But I must admit it was a surprise that Reid Hoffman sold his «baby» to Bill Gates.
What I expected was to see Twitter in that position. Not LinkedIn. But for all I know, maybe Twitter is the next takeover? It`s beginning to be cheap with a market cap of about $10 billion. If this continue, the share price can drop down to about $5.
Twitter should sell before they are worthless. If Google or other media companies wants the platform, they can have it for almost «free» if they wait any longer.
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