Microsoft was pushed into upping its offer for LinkedIn to $26.2 billion by Salesforce, as the two went head to head in a battle for the professional networking service, Bloomberg reported.
A regulatory filing revealed that three more companies, reported by the media to include Facebook and Google, took part in the four-month long discussions and that Microsoft upped its offer from $182 a share to $196 after the other main bidder, which was earlier reported to be Salesforce, offered around $200.
Negotiations had begun at $160 a share and $196 a share meant a 23 per cent increase, and $5 billon more.
The board eventually favoured Microsoft not only because of the higher offer but because it paid all cash, whereas Salesforce’s offer included stock and cash.
What’s more, the board felt the software giant’s offer had “certainty of value” while the Salesforce one had “execution risks,” such as getting approval from shareholders.
The deal includes a $725 million breakup fee.
A meeting of minds
It also came to light that Microsoft boss Satya Nadella and LinkedIn CEO Jeff Weiner were involved throughout the process, along with other executives, lawyers and investment bankers from Qatalyst Partners and Morgan Stanley.
In May, Reid Hoffman, chairman of the board, co-founder and controlling shareholder of LinkedIn, met with Microsoft co-founder Bill Gates and “discussed the business rationale and potential benefits to Microsoft of potentially acquiring LinkedIn.”
LinkedIn claims to be “the world’s largest and most valuable professional network,” with 433 million members and 105 million unique visiting members per month.
It reported a net loss of $45.8 million in the three months to 31 March, compared with $42.5 million a year earlier. Its annual revenue is around $3 billion.
In recent times it has faced criticism for the quality of its mobile offering, and its user interface in general, but over the past year took steps to address these shortcomings.
Microsoft and LinkedIn touted the deal as a combination of the world’s foremost professional cloud and professional networking companies.