Microsoft buys social network company LinkedIn for $26 billion

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The LinkedIn homepage appears on a computer screen in Washington on August 30, 2010. (Photo credit NICHOLAS KAMM/AFP/GettyImages)

4 Fast Facts

  • Microsoft struck a deal with LinkedIn.
  • They’re buying the company for $26 billion.
  • LinkedIn had $3 billion in revenue last year.
  • The LinkedIn brand will continue after the deal is closed.

NEW YORK — Microsoft announced it’s buying the professional social network company LinkedIn Monday in a cash deal valued at $26.2 billion.

Microsoft is paying $196 per share for LinkedIn, a 50% premium over the stock’s closing price on Friday. Shares of LinkedIn soared to near that purchase price in premarket trading Monday following the announcement, while shares of Microsoft slipped 3%.

LinkedIn had $3 billion in revenue last year, up 35% from the year before. It has 433 million members worldwide, up 19%.

But its shares had plunged 42% so far this year, before the deal was announced, after it warned in February of disappointing revenue and profits ahead. The stock had previously traded at a very high price relative to earnings forecasts, based on the assumption that growth would continue at a break-neck pace. The more modest growth forecast sent shares lower.

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.”

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