An SEC filing by LinkedIn chronicles the high-stakes bidding war that resulted in Microsoft’s $26.2 billion acquisition of the professional social networking company.
Microsoft’s $26.2 billion deal to buy LinkedIn, the largest in the Redmond company’s history, was preceded by a monthslong bidding war with another company.
But a LinkedIn securities filing Friday revealed that two bidders together made nine offers for the professional social-networking company, and that LinkedIn reached out to gauge the interest of three other firms.
A company identified in the filing only as Party A made an initial offer in April that valued LinkedIn at $160 to $165 a share.
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By the time LinkedIn’s board gave final approval to a sale two months later, the winning bid had ballooned by 22 percent to Microsoft’s all-cash, $196 a share offer.
LinkedIn and Microsoft declined to comment on the identity of other interested companies. A Salesforce spokeswoman declined to comment.
Deal talks began in February, the filing said, when Microsoft CEO Satya Nadella and his LinkedIn counterpart, Jeff Weiner, met to discuss ties between the companies. The topic of an acquisition came up.
That discussion, and subsequent expressions of interest from two other companies, kicked off a formal process within LinkedIn, as the company brought on lawyers and financial advisers to explore those and other potential bids.
Microsoft’s offers, beginning with a May 4 offer of a $160-a-share deal, were all-cash proposals. Offers by Party A, the only other company said to submit a bid, consistently matched or exceeded Microsoft’s offers, but with offers that were a mix of cash and stock.
When Microsoft increased its bid to $182 a share a week later, LinkedIn signed an exclusivity agreement with Microsoft that prohibited LinkedIn from negotiating with anyone else.
Party A continued to increase its bid in the meantime, though.
At one point, Party A’s chief executive emailed Weiner and Reid Hoffman, LinkedIn’s co-founder and executive chairman, to note that gains in the company’s stock price had increased the value of one of its bids. The executive’s company later upped its offer to $200 a share, $85 a share in cash and the rest in company stock.
Weiner and Hoffman told Microsoft during deal talks that $182 a share was no longer acceptable. In response, Microsoft President Brad Smith said that any higher offer would necessitate “a discussion of cost synergies.”
Cost synergies in big corporate mergers typically entail layoffs.
Weiner later pressed Nadella to “offer the highest price possible.”
On the morning of Friday, June 11, a day before the exclusivity agreement was set to expire, Nadella told Weiner that Microsoft’s board had approved a $196-a-share offer, and that the company wanted to sign the deal that day.
LinkedIn’s board approved the deal that afternoon. It was announced in a news release the following Monday.