There is no hiding the fact that the news of the biggest acquisition of the decade hit everyone square in the face. A couple weeks ago, Microsoft announced that it will be acquiring the professional social network LinkedIn in an all-cash transaction, for $196 per share. But, a lengthy SEC filing released today details that Microsoft wasn’t the only suitor pursuing LinkedIn for an acquisition.
The regulatory filing takes a look at all the nitty gritties of the to-be-closed LinkedIn acquisition. And amidst, detailing all the shareholder, merger, and acquisition rules, the filing also sheds light on the background of the transaction. And once you start reading this section, you’ll realize that the company talked about acquisition with four other unnamed companies, alongside Microsoft.
This is an interesting development! So, are you ready to know about the four other suitors who might’ve been involved in the transaction??
According to the filing, talks between LinkedIn CEO Jeff Weiner and Microsoft CEO Microsoft initiated on February 16th, 2016. The two met to discuss ways in which the two companies could work closely and in the context of this discussion, the concept of a business combination was raised.
No other suitor pursuing the supposed acquisition has been named in the regulatory filing, except Microsoft. The suitors have been referenced using individual alphabets preceded by the word Party, for example Party A, Party B among others. There is no mention of the degree of competitiveness among the aforementioned suitors, so they could’ve easily been involved to just get a look at the company’s financial outlook.
Qatalyst Partners, who are reportedly also involved in Lyft’s acquisition(or fund-raising) handled the financial side of LinkedIn’s acquisition deal. It was the one who brought Party C and D to the mixer.
In addition to this, the filing also mentions that LinkedIn is subject to a $725 million breakup fee if the transaction with Microsoft does not get finalized.
But, let’s take a look at the alleged(or confirmed) suitors who were playing with LinkedIn’s heart before it finally gave it away to Microsoft. Salesforce, who has already confirmed its interest in the company was one of the suitors, alongside Google and Facebook as reported by Recode.
The SEC filing doesn’t name any bidders, but we’ve deduced from the transaction proceedings and insider information that Party A for sure is Salesforce. Party B and Party D have been identified as Google and Facebook respectively, but Party C is still unidentified.
As you might have already heard Salesforce CEO Marc Benioff confirm that the company was a serious bidder in the acquisition of the professional business network. And this is also clear from the SEC filing, as it references a ‘Party A’ which pushed Microsoft to raise its bid offer.
Microsoft was fixated on going ahead with the acquisition, possibly to bank upon the opportunity to finally include a social network in its product offerings. So, it submitted on May 4 a non-binding indication of interest to acquire LinkedIn at $160 per share in all-cash. But, ‘Party A’ i.e Salesforce followed pursuit and submitted its own non-binding indication of interest to acquire the company for $160 to $165 per share in a mix of 50% cash and stock.
Salesforce was either so intent on this transaction that it didn’t wanna back down or it was just toying wait Microsoft to run up the deal price. And according to the filing, that’s exactly what happened. Salesforce pressurised Microsoft to raise its bid several times. Even after LinkedIn had entered an agreement to negotiate with Microsoft exclusively, Salesforce still kept trying to up the ante. Thus, it pushed LinkedIn to realize that it was worth more, so they pressed Microsoft for more money.
And after a bidding war between the two parties, Microsoft walked away with a hefty offer from the professional social media giant. Though LinkedIn is expected to operate individually, Microsoft is still to announce its vision for the company.
You should’ve realized in an instant that Google will be one of the contenders in the race to acquire a ‘social network’, whose own Google+ platform is a missed opportunity. Google — now owned by Alphabet — is one of the best enterprise solutions in the market, offering mail, calender and other cloud solutions to its users. So, it is natural for Google to go ahead and atleast try a hand at acquiring LinkedIn.
The SEC filing describes that ‘Party B’ entered into a confidentiality agreement to consider buying the company after meeting with its management board. But, as the bids started rolling out in the first week of May, B decided to step down without even making an offer. But, it stated that it was still only interested in “commercial partnership” with the company. And now I can’t for sure say, if that would be reality or not.
You couldn’t eliminate Facebook from the mix, when talking about the acquisition of another social network — even though its a professional one. And again, this takes us back to square one. Facebook was probably there to take a brief look at the company’s financials and understand its vision, as the company itself is working on a corporate social network — Facebook for Work.
But, Facebook was involved in the talks for an even shorter period than Google. According to the SEC filing, LinkedIn setup a meetup with Mark Zuckeberg after gaging the social media’s interest in the company. About six days later, Zuckerberg met with the management board to discuss the proposed acquisition. But, the talks ended with Zuckerberg expressing his disinterest in the acquisition.
If you’re looking for more insight into the Microsoft-LinkedIn deal, then give this lengthy SEC filing a read. You wouldn’t be disappointed!