Microsoft to buy LinkedIn for $26 billion
It's not coming cheap.
On Monday, following the announcement, LinkedIn stock soared to near that purchase price, while shares of Microsoft slipped 4%.
The deal combines Microsoft, which dominates the global market for computer systems, with LinkedIn, known as the main social network for professionals.
But its shares had plunged 42% so far this year, before the deal was announced. The big spark came in February when the company warned of disappointing revenue and profits ahead.
The stock had previously traded at a very high price, relative to how much it was expected to earn. Why? Investors assumed that growth would continue at a break-neck pace, and the more dour growth forecast sent shares plunging.
The LinkedIn brand will continue after the deal is closed later this year, the companies said. Jeff Weiner will remain CEO of LinkedIn, reporting to Microsoft CEO 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."
Reid Hoffman, the cofounder and chairman of LinkedIn who is also the company's controlling shareholder, will get $2.9 billion for the sale of his shares. The jump in LinkedIn shares early Monday lifted his net worth by more than $900 million.