Investment about its members to recruiters and sales professionals.

Investment Banking                                                                                                                            Submitted by: Name:Alisha ShethPRN:16020841148   MICROSOFTACQUIRES LINKEDIN TABLE OF CONTENTS INTRODUCTION.. 4      Microsoft 4 LinkedIn. 4 DETAILS OF THE DEAL. 5 Background of the deal 5 About the Deal 5 Financial advisors.

…..

Best services for writing your paper according to Trustpilot

Premium Partner
From $18.00 per page
4,8 / 5
4,80
Writers Experience
4,80
Delivery
4,90
Support
4,70
Price
Recommended Service
From $13.90 per page
4,6 / 5
4,70
Writers Experience
4,70
Delivery
4,60
Support
4,60
Price
From $20.00 per page
4,5 / 5
4,80
Writers Experience
4,50
Delivery
4,40
Support
4,10
Price
* All Partners were chosen among 50+ writing services by our Customer Satisfaction Team

……

….

….

……..

……..

…..

……..

….

……..

……

…. 6 Approvals………………………………………………………………………………………………………….

6  Reasons for the Deal 7 FINANCIALS OF THE DEAL…….

……

……..

….

…….

……

…..

…..

……..

…….

…..

… 8     Impact on the share prices ……………………………………………………………………………….9 OPINION OF THE DEAL….

…..

….

…….

……..

……..

…….

……..

……

….

. ………….10       MICROSOFT ·        MicrosoftCorporation is an American multinational technology company withheadquarters in Redmond, Washington. It develops, manufactures, licenses,supports and sells computer software, consumer electronics, personal computers,and services. ·        Itwas founded by Bill Gates who quit school to co-found Microsoft. ·        Sinceits IPO on March 13, 1986, Microsoft’s stock has risen more than 90,000%.

·        Thecompany also publishes books and multimedia titles, produces its own line ofhybrid tablet computers, offers e-mail services, and sells electronicgame systems,computer peripherals (input/outputdevices), and portablemedia players. ·        Ithas sales offices throughout the world. Microsoft operates research labs inCambridge, England (1997); Beijing, China (1998); Sadashivnagar, Bangalore,India (2005); Santa Barbara, California (2005); Cambridge, Massachusetts(2008); New York, New York (2012); and Montreal, Canada (2015).·        In2000 company cofounder Gates relinquished his role as CEO of Microsoftto Steve Ballmer. He handed over the title of chief software architect in2006 to Ray Ozzie.

Ozzie stepped down in 2010, and longtime Microsoftexecutive Satya Nadella replaced Ballmer as CEO in 2014. LINKEDIN ·        LinkedInis a social network for professionals launched on May 5, 2003 ·         Itis for anybody and everybody who wish to look for new opportunities to growtheir careers and to connect with other professionals. ·        As of2015, most of the company’s revenue came from selling access toinformation about its members to recruiters and sales professionals. As ofApril 2017, LinkedIn had 500 million members in 200 countries, out of whichmore than 106 million members are active ·        LinkedInis headquartered in Sunnyvale, California, with offices in Omaha, Chicago, LosAngeles, New York, SanFrancisco, WashingtonDC, Sao Paulo, London, Dublin, Amsterdam, Milan, Paris, Munich, Madrid, Stockholm, Singapore, Hong Kong, China, Japan, Australia, Canada, India and Dubai ·        LinkedIn’s CEO is Jeff Weiner                                                                                                                                                                   DETAILSOF THE DEAL      BACKGROUND:·        Rightfrom March through June, LinkedIn was in talks with four companies for itstakeover but only Salesforce and Microsoft were seeking a full-on acquisition·        Salesforceactually had the highest bid of $200/share but LinkedIn mentioned that itsboard considered several factors before locking the deal with Microsoft,including the fact that a Salesforce bid would have required approval of thatcompany’s shareholders, as well as the fact that Microsoft only cash whereasSalesforce was offering stock plus cashABOUT THE DEAL: ·        MicrosoftCorp announced the acquisition of LinkedIn Corp for $196/for $26.2bn      including LinkedIn’s net cash.

·         The transaction was announced on 13/6/2016 andwas completed on 8/12/2016. As per the contract, LinkedIn CEO Jeff Weiner wouldthe remain CEO of the professional social network and would report to  the Microsoft CEO Satya Nadella. LinkedInwould sustain its “distinct brand, culture, and independence.” ·        Thedeal is the largest deal by Microsoft Corp . ·        Thedeal was completed in 178 days.

The nature of the bid was friendly. Under thecontract of the deal LinkedIn had to pay termination fees of $725m                         FINANCIALADVISORSTARGET:1.     Allen& Co.2.

     Qatalyst& Co.ACQUIRER:1.     MorganStanley APPROVALS:·        Thedeal was approved by the board of directors of bith the acquirer and the tageton 13/6/2016.·        Targetshareholders approved the deal on 22/8/2016·        Further,the deal required the approval of EC and Competition Commission as well.·        The EC examined whetherMicrosoft could use its strong market position in operating systems (Windows)for personal computers (PCs) and productivity software to strengthenLinkedIn’s position among professional social networks.Hence it gave anapproval after 176 days i.e on 6/12/16                                                                                                                                  REASONSFOR THE DEAL:  Satya Nadella listed  a specific set of integration scenarios whichled to the deal in the first   place:·        LinkedInidentity and network in Microsoft Outlook and the Office suite·        LinkedInnotifications within the Windows action center·        Enablingmembers drafting resumes in Word to update their profiles, and discover andapply to jobs on LinkedIn·        Extendingthe reach of Sponsored Content across Microsoft properties·        Enterprise LinkedInLookup powered by Active Directory and Office 365·        LinkedInLearning available across the Office 365 and Windows ecosystem·        Developinga business news desk across our content ecosystem and MSN.com·        Redefiningsocial selling through the combination of Sales Navigator and Dynamics 365     FINANCIALSOF THE DEAL: ·        Thedeal was an all cash deal of $26.

2bn. ·         Microsoft raised $US19.75 to help finance itsplanned purchase of LinkedIn . There was a strong demand forMicrosoft’s shares that aided them to borrow at lower rates as compared to itsprevious bond issue. ·        S Global Ratings assigned thebonds the top AAA grade in a note reviewing the sale on Monday. Moody’sInvestors Service also gave the bonds its top grade.

Bank of  America , JPMorgan Chase & Co. and WellsFargo & Co. managed the bond sale.

  IMPACT ON THE SHARE PRICES:·        Theshare price of the target i.e LinkedIn went up from 125.15 to 193 which is ajump of  47% on the announcement of thedeal.·        Onthe other hand, Microsoft’s stock declined by 3.2%·        Microsoftpaid a premium of 49.38% and closed the deal at 196/share.·        Thereis a positive gross spread which indicates the exponent by which the deal wasovervalued·        Thegraph displays how the share price of Microsoft recorded its highest after thedeal was completed.

This indicates positive market sentiments  OPINIONOF THE DEAL: Thereare a few reasons which point out towards the fact that the deal may not be afavorable one.·        TheIndustry of social networking is not very lucrative. This can be seen from thefact that LinkedIn being the market leader made a loss of $166m·        The acquisitionmay not be a profitable one for Microsoft and one of the reasons for the sameis that Microsoft is overpaying for the deal. A look at comparable dealsvalidates  this fact     ·        LinkedIn’sshare price had dropped by 40%  and itsfinancial statements had revealed  that it made anet loss of around $165m in 2015, despite revenues of $3 billion, in large partbecause of excessive stock-based compensation.·        However,there are some benefits too that LinkedIn can provide to Microsoft. Thesocial-network firm has a great team of data scientists which is a must fortech firms.

LinkedIn gathers elaborated information about its users that  comprises of their employment history,education and whom they know. This can create a great value for Microsoft sincetheir aim is to manage relationships with their customers by providing themofferings. This can help to create a competitive advantage against Salesforce,apotential competition ·        Microsofthas seen its share of failure when it had acquired Skype in 2011 for $8.5billion, aQuantive $6.3bn and  Nokia’shandset business in 2014 for $7.

6 billion. However , Microsoft has earned$1.1bn from LinkedIn in the previous quarter which is a sign that Microsoft’sacquisition has finally bore fruits