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Microsoft is set to buy LinkedIn for $26bn

Posted by: Robert Stokes
15/06/2016

The biggest deal in the Tech sector has taken place this Monday:

MICROSOFT IS SET TO BUY LINKEDIN FOR $26BN.

According to Microsoft’s blog, LinkedIn will retain its distinct brand, culture and independence. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, and Weiner both fully support this transaction. The transaction is expected to close this calendar year.

“The deal will bring together the world’s leading professional cloud with the world’s leading professional network. The LinkedIn team has grown a fantastic business; 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.”said Nadella yesterday.
LinkedIn CEO Jeffrey Weiner said in a statement, “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.”

Although with this new deal Microsoft can embed LinkedIn with Skype, its email system and other Microsoft enterprise products, what happened on Monday opens the door to lots of considerations:

- Is the deal connected with the massive hacker attack which happened recently to both Microsoft and LinkedIn, putting the security of 167,370,910 users at risk - whose password and username data have being sold on the black market?
- Is the business social networking industry attractive enough to justify the $26BN investment?
- Is it going to be a real positive acquisition?
- How will Weiner continue to be CEO of LinkedIn - considering that he will report to Nadella instead of a board of directors?

We all know that all kind of mergers and acquisitions represent a mean to create value to businesses by different ways (such as acquiring technologies, products, and market access, creating economies of scale, and establishing global brand presence), but it is not a secret that one of the biggest barriers to effective integrations is culture. In one study by Deloitte, culture was found to be the cause of 30 percent of failed integrations. Companies with different cultures find it difficult, if not impossible, to make decisions quickly and correctly or to operate effectively.
So I guess the important question that follows this acquisition is: “How difficult will it be to integrate Microsoft and LinkedIn?”
What process will Weiner have to go through if he wants to introduce a new service, make an acquisition, or target a new set of customers?

 

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