Microsoft announced this morning that they will purchase LinkedIn for $26.2 Billion in cash, making it the largest acquisition in Microsoft’s history. To compare, the next largest acquisitions by Microsoft were Skype ($8.5 billion in 2011), Nokia’s phone division ($7.6 billion in 2013), online advertising company Aquantive ($6 billion in 2007), and Minecraft maker Mojang ($2.5 billion in 2014). LinkedIn’s CEO Jeff Weiner will report to Microsoft’s CEO Satya Nadella. LinkedIn will keep its branding and become part of Microsoft’s productivity and business process division.
Why does this acquisition make sense for both companies?
Microsoft and LinkedIn have Similar Missions
In an open letter to his employees, Microsoft CEO says that they and LinkedIn have similar missions “centered on empowering people and organizations”. Microsoft’s official mission statement is “to enable people and businesses throughout the world to realize their full potential.” In his letter to LinkedIn employees, CEO Jeff Weiner writes that this acquisition is an opportunity for LinkedIn to reach the mission it set out to accomplish 13 years ago. He writes, “Our mission to connect the world’s professionals to make them more productive and successful, and our vision to create economic opportunity for every member of the global workforce.”
For an acquisition to work, whether big or small, both businesses must have similar missions and visions.
Microsoft and LinkedIn have the same Ideal Customer
Both Microsoft and LinkedIn are creating products and services for professionals and organizations. Combining their companies allows them to better serve their customers. Microsoft CEO writes that in the future, LinkedIn’s newsfeed will be able to show relevant articles (a.k.a. advertising) to their users based on the projects they are working on. Or if someone is working in Office 365 and stuck on a task, Microsoft can now suggest an expert from LinkedIn to help you complete that task or a training video from Lynda.com (which was acquired by Microsoft for $1.5 billion last year) so you can learn how to complete that task.
Microsoft and LinkedIn are stronger together than apart
Ultimately this is the reason that Microsoft acquired LinkedIn – that they believe that the companies are stronger together than apart. By joining Microsoft, LinkedIn is now able to compete directly with the biggest companies in the world. Jeff Weiner writes, “Imagine a world where we’re no longer looking up at Tech Titans such as Apple, Google, Microsoft, Amazon, and Facebook, and wondering what it would be like to operate at their extraordinary scale — because we’re one of them.”
By acquiring LinkedIn, Microsoft is able to expand into the social media world and compete with Facebook and Twitter. Satya Nadella writes, “So far, what I’ve learned about the LinkedIn team is how much our cultures share many of the same attributes. We both care deeply about individual and collective growth, and find deep meaning in the work we do to make a difference in our world. Together we’ll do just that.”
Also, by operating together it is estimated that they can save $150 million a year in operating expenses.
It will be interesting watching how both companies will integrate with each other, and how their products and services will change as a result of this acquisition. Only time will tell whether this major decision was a wise one or a foolish one – all we know now is that the decision was a bold one.
Why am I writing about this?
Two words: guerrilla marketing.