Microsoft to pay $26B for popular, no-profit LinkedIn (Update)

Microsoft Corp. has agreed to pay $26.2 billion -- $196 a share -- for LinkedIn Corp., the social-media company focused on job networking and hiring. Microsoft statment here. 

The price is a fat premium to LinkedIn's recent trading value of $100-$130 a share, but a discount to its 2015 alltime high above $270. LinkedIn has been steadily unprofitable despite rapidly growing sales. LinkedIn has also faced large-scale, embarrassing and potentially costly security breaches.

Microsoft boss Satya Nadella said the purchase, the company's largest since he became CEO, will leave LinkedIn with "its distinctive brand, culture and independence," under CEO Jeff Weiner and chairman Reid Hoffman. Major LinkedIn owners who will cash in on the sale include the American and T. Rowe Price mutual funds, and Sands Capital Management, Arlington, Va., with many others.

In a statement, Microsoft called LinkedIn "the world's largest and most valuable professional network" with innovative mobile apps, "online learning platform" Lynda.com and enterprise recruitment software platform Recruiter. LinkedIn boasts "more than 433 million members worldwide," up 19 percent over a year ago; 105 million "unique visiting members per month," up 9 percent; and fast-growing mobile usage and job listings.

"By buying LinkedIn, Microsoft is giving Office a social network of its own. In theory, it's the perfect fit, because both are focused tightly on the working world. The collaboration could get people to use Microsoft software more often, making it less likely that they'll cancel their subscriptions at the end of the year...

"Having access to LinkedIn's data will also help make Microsoft's personal assistant, Cortana, a bit smarter... For LinkedIn, the hope is that people will find more use for professional networking if they do it while they're actually working." More here.

LinkedIn is generally a place where people go when they're looking for work, and Microsoft Office is a tool they use to actually do work. Keeping those two activities separate limits their appeal: Many people just don't see a  reason to check in on their LinkedIn accounts very often. Microsoft's $26.2 billion acquisition of LinkedIn—one of the biggest deals ever in the tech industry—is based on the theory that people will start using both LinkedIn and Microsoft Office more if they're combined.

In a presentation to investors on Monday, the companies stressed how much the two services could reinforce one another. LinkedIn has information that can help Microsoft Outlook users do last-minute prep for meetings. The same goes for a Skype call, or maybe even a document being shared through Office365. At a time when there's a layer of social networking laid on top of just about everything, running a suite of productivity software that's largely isolated can be a big disadvantage.

Close all those tabs. Open this email.

By buying LinkedIn, Microsoft is giving Office a social network of its own. In theory, it's the perfect fit, because both are focused tightly on the working world. The collaboration could get people to use Microsoft software more often, making it less likely that they'll cancel their subscriptions at the end of the year. Having access to LinkedIn's data will also help make Microsoft's personal assistant, Cortana, a bit smarter. Microsoft gives the example of the virtual assistant telling someone that the person she's meeting with went to the same college she did, and giving her a quick update on how the school's sport's team did, presumably to give her some easy fodder for chitchat.

For LinkedIn, the hope is that people will find more use for professional networking if they do it while they're actually working.