Microsoft is buying the professional social network LinkedIn for $26.2 billion (£18.5bn) in one of the biggest technology deals in history.
The news, announced on Monday afternoon, instantly sent LinkedIn’s share price soaring by 50 percent in pre-market trading. The deal be the biggest in Microsoft’s history. Microsoft’s shares fell 3.5 percent on the news.
Microsoft said LinkedIn boss Jeff Weiner would stay in charge and report to Satya Nadella.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
Weiner said: “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.
“For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.”
LinkedIn, which has 400 million members, has halved in value since early 2015 after warning that growth in lucrative areas could be slowing, although Microsoft said it was confident in the company’s future, pointing out increasing use of its mobile app.
The social network allows professionals to create online resumés and network, and is widely used by recruiters to find new candidates.
Buying LinkedIn is the latest step in Nadella’s transformation of Microsoft. Since taking over from Steve Ballmer in February 2014, he has focused on the company’s efforts in cloud computing and enterprise, rather than consumer hardware and mobile software pursued by Ballmer and exemplified by Microsoft’s disastrous acquisition of Nokia’s devices unit.
The deal dwarfs the €5.4 billion (£4.3bn) purchase Nokia’s device unit as well as that of Skype, which Microsoft paid $8.5bn for in 2011. It has been unanimously approved by both boards including Reid Hoffman, LinkedIn’s founder who retains a controlling stake in the company.
In a letter to Microsoft staff, Nadella said that “LinkedIn will retain its distinct brand and independence, as well as their culture which is very much aligned with ours”.
However, he also said the two companies would be working together, particularly on Office 365 – Microsoft’s suite of productivity programs including Outlook and Word – and Dynamics, its customer service software.