SEC documents reveal the story behind Microsoft’s acquisition of LinkedIn

It turns out Microsoft Corp. wasn’t the only tech giant interested in acquiring LinkedIn Corp.

A document filed with the U.S. Securities and Exchange Commission (SEC) on June 1 reveals that LinkedIn approached four other companies regarding a potential acquisition – referred to as “Party A,” “Party B,” “Party C,” and “Party D.”

While “Party C” remains anonymous as of this writing, Vox Media-owned tech website Recode has identified “Party A” as Salesforce, “Party B” as Google Inc., and “Party D” as Facebook, Inc. Salesforce CEO Marc Benioff confirmed that his company gave LinkedIn a “solid look,” while anonymous sources indicated the involvement of Google and Facebook, with spokespeople for both companies declining to provide a comment for Recode.

CTV tech analyst Carmi Levy is less than surprised by the revelations in LinkedIn’s SEC’s submission.

CTV technology analyst Carmi Levy isn’t surprised by the revelation that Microsoft wasn’t the only company vying for LinkedIn.

“I think even before this information was made public, you had to know that there was more than one possible suitor sniffing around behind the scenes, because otherwise Microsoft would not have busted its piggy bank for the privilege of buying LinkedIn,” he says. “So it was fairly clear that even if there wasn’t a bidding war in progress, there was a potential for a bidding war to begin, and Microsoft wanted to make sure that whatever offer it made would shut down the competition and win the battle.”

According to the documents filed with the SEC, LinkedIn’s board of directors considered selling the company as part of a routine evaluation of its “strategic direction and ongoing business plans,” during which the board also considered remaining a standalone entity, modifying LinkedIn’s business strategy, and combining its services with other businesses.

LinkedIn’s first meeting with a potential suitor was between CEO Jeff Weiner and Microsoft CEO Satya Nadella on February 16, the document says, during which the executives discussed LinkedIn and Microsoft’s ongoing commercial relationship and ways they could enhance it.

“Among other things, the concept of a business combination was raised,” the document says.

Weiner later met with an unnamed Salesforce executive on March 10, the document says, noting that Weiner and Salesforce CEO Benioff had discussed the possibility of Salesforce acquiring LinkedIn beforehand.

While Benioff himself would not comment, sources told Recode that Salesforce would have been primarily interested in LinkedIn’s recruiting business.

Google entered the picture on March 14, when LinkedIn cofounder Reed Hoffman attended a previously-scheduled meeting with one of “Party B”’s senior executives, who later contacted both Hoffman and Weiner to set up an additional meeting regarding future opportunities to collaborate.

As for Facebook, “Party D” turned out to be a red herring: Hoffman attended a previously-scheduled meeting with CEO Mark Zuckerberg on April 7, according to Recode, during which Hoffman mentioned that LinkedIn had become the target of a potential acquisition, and was told that “Party D was not interested in exploring a business combination transaction with LinkedIn at that time,” according to the document.

Google, however, gave the idea some consideration: after meeting with Hoffman and Weiner on March 29 to discuss the potential benefits of an acquisition – two days before Hoffman and Weiner met with Microsoft executives for the same reason – a senior executive with the company told Weiner that Google was interested in “exploring” a potential acquisition of LinkedIn.

It wasn’t until May 3 that members of Google’s executive team told Weiner that the company was no longer interested in acquiring LinkedIn.

Salesforce, meanwhile, formally submitted a bid to acquire LinkedIn for between $160 and $165 USD per share on April 25, while Microsoft submitted its own acquisition bid of $160 USD per share on May 4. LinkedIn representatives told both companies it was prepared to begin negotiations with them on May 6, valuing itself at $200 USD per share.

While that could seem like an overvaluation to many tech outsiders, Levy believes LinkedIn – and its lucrative audience of 433 million professionals – was worth every penny.

“I think the question here isn’t necessarily who would’ve been interested in LinkedIn… the question is, who wouldn’t be?” he says. “In social media, the value is always in the audience that is using that platform… and for Google and Salesforce and, of course, Microsoft – any other platform company, any other marketing-driven company, any other tech company – would need to be absolutely crazy to not want to have LinkedIn’s level of insight and access.”

On May 9, Salesforce submitted a revised proposal to acquire LinkedIn for $171 USD per share, while Microsoft submitted a revised proposal to acquire LinkedIn for $172 USD per share on May 11.

Microsoft, however, could afford to pay in cash, while Salesforce would have had to use a mix of cash and stock. LinkedIn’s representatives informed Salesforce they were entering an agreement with another party on May 13.

A month later, Microsoft and LinkedIn announced that the former would be acquiring the latter for $26.2 billion USD – around $196 USD per share.

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Jim Love, Chief Content Officer, IT World Canada

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Eric Emin Wood
Eric Emin Wood
Former IT World Canada associate editor turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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