Microsoft was forced to increase its offer to acquire LinkedIn Corp. by 22%, or almost $6 billion, following a fierce bidding war with Salesforce.com.
Last month it was announced that Microsoft would be acquiring LinkedIn for $26.2 billion, or $196 a share in cash.
According to a regulatory filing by LinkedIn, Salesforce made a bid valued $500m more (on paper) than Microsoft’s, however, its cash-and-stock offer was ultimately considered to be less appealing than the all-cash bid from Microsoft.
On May 4 Microsoft submitted a nonbinding indication of interest to acquire LinkedIn at $160 a share in cash. Nine days before that, a different company, described by LinkedIn as “Party A,” submitted a separate nonbinding indication of interest to buy the company for $160 to $165 a share in a mix of cash and stock.
A person familiar with the matter told The Wall Street Journal that Salesforce is Party A.
According to a report by The Financial Times, the amount Microsoft ended up paying for LinkedIn could translate into cost-cutting measures at the firm.
During the bidding process, Microsoft chief executive Satya Nadella warned Jeff Weiner, his counterpart at LinkedIn, that “a discussion of cost synergies in the transaction would be necessary” as Microsoft increased its offer.
This means that there could be layoffs as a result of the merger.
The filing also revealed that Microsoft founder Bill gates held talks with LinkedIn co-founder Reid Hoffman about the possibility of Hoffman joining the tech giant’s board, however, there were no final resolutions.