Some six months after Microsoft Corporation (NASDAQ:MSFT) offered $26.2 billion for LinkedIn, the two companies made it official on Thursday. Microsoft is now the owner of the social network.
LinkedIn is officially Microsoft’s biggest acquisition ever, surpassing its two previous big deals. The company shelled out $8.5 billion to buy Skype back in 2011 and $7.6 billion to buy Nokia’s phone unit in 2013. Years later, both of those deals are considered disappointments.
What does the future hold for this acquisition?
Microsoft paid a pretty penny for LinkedIn, with the price totaling more than $50 per user for the social network. LinkedIn was marginally profitable in both 2012 and 2013, generating profit of $22 million and $27 million, respectively. That’s peanuts compared to the $26.2 billion purchase price.
The acquirer is betting on one thing, sustainable growth. LinkedIn is growing like a weed. Revenue was less than $1 billion back in 2012. That grew to nearly $3 billion in 2015 and the company is on pace to do close to $4 billion in revenue in 2016. In a world without many pure growth stories, that’s pretty impressive.
Microsoft is also hoping LinkedIn can help it become a bigger player in cloud services. The two companies plan to join forces to work on that part of the business.
The only thing standing in the way of the transaction closing was the European Union giving its blessing, an event that happened on Tuesday. Governments of Canada, the United States, and Brazil also approved the deal without issue.
Tech Insider
