Microsoft to buy LinkedIn for $26bn in cash – as it happened
Software giant has stunned Wall Street by agreeing to buy business social media network LinkedIn
Brexit:
6.09pm BST
And finally, back to Microsoft's proposed $26bn purchase of LinkedIn, and the hefty earnings multiple it is paying:
Microsoft is paying the highest earnings multiple of any 2016 deal valued at more than $5 billion to buy LinkedIn pic.twitter.com/mFoT2NVjrL
Microsoft's core business is built around enterprise productivity software. They've been increasingly under threat from all sorts of players competing for pole position in this space.
Google and Facebook, two of the biggest tech companies in the world with strong consumer propositions have moved heavily into this enterprise area, with Facebook at Work and Google for Work.
5.55pm BST
Sterling can't quite make up its mind about the ICM poll. Juddering about a bit but certainly not collapsing pic.twitter.com/yQbR6wIQkV
5.50pm BST
Commenting on the growing lead for Brexit, Joshua Raymond of broker XTB.com said:
With the latest ICM poll showing support for a Brexit strengthening on both online and phone polls, investors continue to be concerned and are expected to downsize their positions in UK stocks and holdings in pounds sterling. The fact we are not seeing any degree of volatility in the latest polls, which all point to a healthy lead for the leave campaign is making investors risk averse.
5.24pm BST
And here is the latest ICM poll, showing the Leave campaign further in the lead. Tom Clarke reports:
Support for leaving the EU is strengthening, with both phone and online surveys reporting a six-point lead, according to a new pair of Guardian/ICM polls.
Leave now enjoys a 53%-47% advantage once "don't knows" are excluded, according to the research conducted over the weekend compared with a 52%-48% split reported by ICM a fortnight ago.
Related: EU referendum: leave campaign takes six-point lead in Guardian/ICM polls
5.09pm BST
It took 14 years for LinkedIn to grow into a business worth $26bn to Microsoft, and my colleague Sean Farrell has taken a look at the company's history:
Related: LinkedIn's rapid 14-year growth led to $26.2bn Microsoft deal
5.01pm BST
The $26bn deal for Microsoft to buy LinkedIn has done little to support stock markets, which are more concerned with a global slowdown and the consequences of the UK voting to leave the European Union. With talk of the latest ICM poll showing a lead for the Leave camp, markets have slumped once again. The final scores showed:
4.38pm BST
Chris Beauchamp, senior market analyst at IG, said:
Microsoft has clearly found another use for some of its cash, and while LinkedIn may have faded from view as the market focusses on the triumphs of Facebook and the travails of Twitter, the social network's database offers a tantalising way to expand Microsoft's reach once more. The use of debt rather than stock will reassure those that worry this is another sign of a market top, and will have the added benefit of raising the prospect of a buyer for Twitter.
4.20pm BST
In an email to LinkedIn employees, chief executive Jeff Weiner says the Microsoft deal is best for the company:
No matter what you're feeling now, give yourself some time to process the news. You might feel a sense of excitement, fear, sadness, or some combination of all of those emotions. Every member of the exec team has experienced the same, but we've had months to process. Regardless of the ups and downs, we've come out the other side knowing beyond a shadow of a doubt, this is the best thing for our company.
Some of you may be asking "Why Microsoft?"
Long before [Microsoft boss} Satya [Nadella] and I first sat down to talk about how we could work together, I had publicly shared my thoughts on how impressive his efforts were to rapidly transition Microsoft's strategy and culture. After all, it's extremely rare to see a company of that scope and scale move so quickly to make fundamental changes.
3.32pm BST
Meanwhile back in the foreign exchange market, sterling has recovered all its losses ahead of the forthcoming ICM poll.
Remember this morning's #GBPUSD sell-off? Cable now 30 odd pips higher. Trigger of rebound not entirely clear #BREXIT
3.30pm BST
Despite the excitement about the $26bn deal for Microsoft to buy LinkedIn, the overall US market has failed to move into positive territory.
With worries about a global slowdown and the impact of a vote by the UK to leave the EU, the Dow Jones Industrial average has dipped 0.02%, Nasdaq is down 0.12% and the S&P 500 is 0.13% lower.
3.22pm BST
With Twitter shares up on speculation it could be the next to be snapped up after LinkedIn, some believe a deal could make sense. Saxo Bank head of equity Peter Garnry thinks Google could buy the business by the year end.
Twitter has 350 millions users, but it has been a problem for the company to grow its user base, he said. Nevertheless Twitter has managed to increase its cash flow profitability over the last 4-5 quarters and on a cashflow basis the company is improving rapidly. He said it had been difficult for Google to create a social media space stronghold and for that reason he thought Twitter would be a good fit for Google.
3.11pm BST
This deal even beats that $19bn which Facebook splashed out on WhatsApp in February 2014.....
Interesting. #LinkedIn #Microsoft pic.twitter.com/Ucr2G09rdY
3.06pm BST
Microsoft is getting the cash for this deal though issuing new debt, rather than tapping its own cash pile.
Why would it do that? Because it's more tax efficient; Microsoft won't have to repatriate any of the cash currently held offshore back into the US (where it would face higher taxes).
The LinkedIn acquisition, financed by new debt, is just good tax minimisation for Microsoft. https://t.co/OU3inj4iCb pic.twitter.com/bw6SuYPT58
2.54pm BST
Here's Alex Hern's news story on the Microsoft-LinkedIn deal:
Related: LinkedIn bought by Microsoft for $26.2bn in cash
If the deal with Microsoft goes through as planned, Jeff Weiner, who joined LinkedIn in 2008 as the company's president before becoming chief executive later that year, will stay on in his current role, reporting directly to Microsoft boss Satya Nadella.
In a statement, Nadella hinted at the competitive advantage he expects the network to provide for Microsoft. He said LinkedIn would pair well with the company's business-focused software such as Office and customer relationship manager Dynamics.
2.52pm BST
Over on Wall Street, LinkedIn shares have jumped by 47% to $193 in early trading.
Context - the $26bn Microsoft is paying for LinkedIn is roughly the market cap of Sky. Or about 8 times value of DMGT(Daily Mail)
2.46pm BST
Social media is buzzing with reaction to Microsoft's $26bn cash splurge acquisition:
"Hi, I'd like to add you to my professional network on LinkedIn." pic.twitter.com/ZKe3tuO174
Microsoft is buying LinkedIn to complete its monopoly on things you want to unsubscribe from and don't know how you were signed up for
I hope LinkedIn congratulates Microsoft on the anniversary of their merger on this day every year.
2.45pm BST
LinkedIn gives Microsoft a serious presence in the business social networking business, says mobile analyst Ben Wood of CCS Insight:
MSFT buys LinkedIn: now has play in enterprise social vs Google & Facebook at Work with database acquired at fraction of cost of a FB user.
2.40pm BST
Shares in Twitter are rallying in early trading; perhaps on speculation that it could now be snapped up.
Twitter stock is up 6% right now after LinkedIn got bought lol pic.twitter.com/eO9vBaGftw
2.37pm BST
This is Satya Nadella's biggest deal since he replaced Steve Ballmer as Microsoft's CEO in February 2014.
Nadella says he's been thinking about buying LinkedIn for a while, and he'll need to persuade analysts that it really makes sense, given the huge price tag.
Big risky bet or carefully calculated move? @LinkedIn deal is largest for @Microsoft CEO @satyanadella since he took the helm in 2014
If Microsoft do to LinkedIn what they did to Nokia, there's hope for all our inboxes yet.
2.23pm BST
Augustin Eden at City firm Accendo Markets (who doesn't sound like a great fan of LinkedIn) explains why Microsoft's shares are likely to suffer today:
Shares in professional networking/dating/narcissism website LinkedIn are called to open around 40% higher at the US open after confirmation it has welcomed a mammoth takeover approach from Microsoft constituting a nigh on 50% premium over Friday's share price close.
Shares in Microsoft were understandably suspended from trading in the lead-up to this bit of news, given that the traditional reaction to such an announcement often involves a shareholder exodus from the predator. With this deal lightening Microsoft's coffers to the tune of $26bn, make that an exodus of biblical proportions.
2.20pm BST
Today's announcement is full of cheerful quotes justifying the deal. Here's a selection:
"The LinkedIn team has grown a fantastic business centered on connecting the world's professionals.
Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet."
Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn's network, now gives us a chance to also change the way the world works.
Today is a re-founding moment for LinkedIn. I see incredible opportunity for our members and customers and look forward to supporting this new and combined business.
I fully support this transaction and the Board's decision to pursue it, and will vote my shares in accordance with their recommendation on it.
2.15pm BST
LinkedIn shareholders will be celebrating tonight....
$26b deal...@Microsoft to buy @LinkedIn . Shares +48% in Pre-market. pic.twitter.com/PSg7vCeX6K
2.08pm BST
Guys, there's only one joke about this deal...and it's been done. Many times....
"Hi, I would like to add you to my professional network on LinkedIn..." pic.twitter.com/15TEIqXg2a
2.07pm BST
Tech analyst Amir Mizroch explains the motivation behind the deal:
By buying LinkedIn, Microsoft gets into content [LinkedIn is world's biggest business publisher] and recruitment - a huge and growing market
2.05pm BST
Microsoft and LinkedIn have released a short video about the deal.
In it, MS CEO Satya Nadella talks about his "great admiration for LinkedIn".... and explained that his vision is to combine LinkedIn's productivity and communication tools with Microsoft's professional network.
.@Microsoft & @LinkedIn: world's leading professional cloud + world's leading professional network https://t.co/63V90F77Wj
1.56pm BST
Shares in Microsoft have slid by 5% in pre-market trading, as investors react to the news it's paying $26bn for LinkedIn.
Microsoft shares re-open after halt, fall more than 5.2% after announcing $26.2B all-cash LinkedIn acquisition: https://t.co/UgD6BM3US4
1.54pm BST
The Wall Street Journal's Dennis Berman argues that LinkedIn has capitulated, by selling out to Microsoft.
LinkedIn sale is not liberation. It is capitulation. Company's all-time high hit $258 per share. Selling for $196/share today. $MSFT
Washington Post sold for $250 million; Financial Times sold for $1.3 billion; LinkedIn (business model anyone?) bought for $26.2 billion
1.52pm BST
This deal values each of LinkedIn's 433 million users at $60 each, points out Reuters' Peter Thal Larsen:
Congrats everyone, Microsoft reckons your Linkedin account is worth $60 in cash.https://t.co/wCx1iohGHr
@peter_tl Mine really isn't. I don't even understand it.
1.50pm BST
Microsoft has swooped on LinkedIn four months after the company shocked Wall Street by missing its revenue forecasts.
Back in February, LinkedIn revealed that its online ad revenue growth had slowed to 20% in the fourth quarter from 56% a year earlier.
RBC analysts said they had thought LinkedIn was on the cusp of "fundamentally positive" change. "We were wrong," they said in a client note.
1.40pm BST
Some big breaking news in the tech sector - Microsoft, the software giant, is buying business social network site LinkedIn for more than $26bn.
The deal, just announced, values LinkedIn at $196 per share - or almost 50% above Friday night's close of $131.
1.19pm BST
While we wait for ICM to deliver their poll, let's hear a few words from George Osborne.
"People who are concerned or businesses who are concerned or investors who are concerned about the prospect of Britain leaving the EU should speak up.
This is not the moment for businesses to sit it out."
Related: Sir James Dyson dismisses Brexit trade fears as 'cobblers'
1.06pm BST
The US stock market is expected to dip when trading begins in 90 minutes time.
US Opening Calls:#DOW 17813 -0.32%#SPX 2090 -0.26%#NASDAQ 4446 -0.36%#IGOpeningCall
Ouch! #China stocks sink most since Feb. Shanghai Comp closed down 3.2% at 2833.07, Shenzhen -4.8%; ChiNext -6%. pic.twitter.com/2iNP8XRVkp
12.51pm BST
ICM would like everyone to relax until they have finished working on their poll with, ummm, my colleague Tom Clark....
Everyone needs to calm down a bit. Please leave me alone so I can get the data to @guardian_clark
12.45pm BST
Hmmmm. No sign of that ICM Referendum poll yet.
And its website has just crashed under the weight of web traffic looking for it....
ICM WEBSITE CRASHES AHEAD OF POLL RELEASE#Brexit
ICM just said due to "unforeseen difficulties" poll been delayed, will be today but can't confirm what time now
12.15pm BST
City traders are bracing for fresh volatility, as polling company ICM is expected to release a new survey at 12.30pm BST.
Half an hour before first poll of the week - from ICM
11.54am BST
Another sign of European Brexit fears:
Brexit ripples: Hungary economy minister reckons Britain leaving EU would cut Hungarian GDP by 0.3-0.4 pct, longer term uncertain
11.50am BST
Barings are also worried that Brussels would not cut Britain a generous deal if the public vote to leave the EU.
They write:
Post-Brexit concessions to the UK would send the wrong signal to other EU countries where nationalistic movements are growing. This could result in a political chain-reaction that could easily trigger a series of national referendums in numerous member countries.
In terms of financial commitments, if the UK leaves the EU, it would save around 10 billion in net contributions.
11.11am BST
How badly could the pound be hit by a victory for Brexit campaigners?
Practically, the mechanism through which capital flows will need to be attracted into the UK has to be through a cheaper sterling.
There has not been an exact match for this event in the past, but previous times of stress have seen sterling depreciate by 15% to 20% on a trade-weighted basis. Research we have seen suggests that sterling could have to weaken by 25% to 30% in the event of Brexit, to continue to attract capital flows, slow imports and boost exports for the UK economy.
10.59am BST
Ironically, the London stock markets is suffering less of a selloff than the rest of Europe today.
The FTSE is currently down 31 points, or 0.5%, while French stock are down a whopping 1.4%.
In the case of a Leave vote in the UK referendum (a scenario to which bookmakers' odds attribute a 30% probability), we expect UK equities to outperform the European market, given the likely depreciation of the pound in such a scenario as well as the market's defensive sector structure.
10.40am BST
Brexit fears have rippled as far as Prague.
The Czech Republic's main stock market has fallen 2% today, to its lowest level in seven years. And next week's EU referendum is, apparently, partly to blame.
"High probability of Brexit (Britain leaving the European Union) remains the biggest short-term risk."
10.08am BST
The pound is hitting fresh two-month lows, as investors react to the tightening of the EU referendum race.
Sterling is now down one cent against the US dollar at $1.4137, and more than eurocent against the euro at a1.254.
Even if we manage to navigate the near term threats of a Brexit and a likely US rate hike, the continued slowdown in China will provide a remains a significant ongoing risk to global demand.
It is clear that in a week which is relatively light on economic data, the focus will remain on the risk of a Brexit, which could destabilise not only the future of England, but also the European project as a whole.
Betfair Brexit probability has increased to 36%, up from 22% just 4 days ago: https://t.co/IQIiRVPYrs "
9.55am BST
In another sign of global anxiety, Fitch has just cut the outlook on Japan's credit rating to negative, from stable.
9.18am BST
City firm ETX Capital believes there is a growing chance that Britain votes to leave the EU, given the latest polling.
Joe Rundle, their head of trading, explains:
Momentum is behind the Vote Leave camp as polls seem to show more support for Brexit than at any point in the campaign so far.
We've seen heavy selling and shortened our Brexit market price from over 80% - implying a one-in-five chance of Britain leaving the EU - to 66%, which indicates a one-in-three chance of Brexit.
#Euref | According to #Betfair, #Brexit probability rose to 34% this morning. pic.twitter.com/rZMZEgdDHq
Where LEAVE and REMAIN stand with just 10 days to go pic.twitter.com/3TnpotfLOA
9.11am BST
The cost of insuring against the pound tumbling against the euro over the next month has hit a record high this morning.
Reuters explains:
Euro/sterling one-month implied volatility, derived from an option that covers the June 23 referendum date and its aftermath, hit 26.3% according to Reuters data, exceeding the previous record of around 25% hit during the global financial crisis in 2008.
The equivalent sterling/dollar one-month implied volatility also rocketed to 28.1%, close to its 2008 peak of around 29%.
8.40am BST
UK chip-maker ARM is the biggest faller in London this morning, along with financial stocks and miners.
ARM is being hit by fears that a global downturn would hurt demand for its semiconductors, helping to drag the FTSE 100 down to a three-week low.
The markets got off to a dreadful start this Monday....
A healthy dose of drag from the Brexit-fearing banking stocks (especially Barclays and Lloyds) is adding to the FTSE 100's losses.
8.38am BST
This chart shows how the London stock market has dropped back to its recent lows:
#FTSE100 back around May lows pic.twitter.com/FY4lqVYqtp
8.17am BST
The London stock market is now at its lowest level since May 20.
The FTSE 100 has lost 200 points since last Wednesday; today's selloff, plus the heavy losses on Thursday and Friday, have wiped out the gains of the last three weeks.
8.13am BST
As feared, European markets are falling at the start of trading.
London's FTSE 100 has already shed 43 points, or 0.7%. There are deeper losses across the channel, with the French CAC down 1% and Germany's DAX losing 1.2%.
Investors continue to fret over global growth with China weekend data failing to inspire and the IMF sounding the alarm (again) over a Chinese corporate debt bubble.
Anxiety persists about the risks of a UK vote to leave the EU (Brexiety?) and traders prepare themselves for a hat-trick of central bank updates this week - from the US Federal Reserve (Wednesday), the Bank of Japan and the Bank of England (both on Thursday).
8.05am BST
The pound is sliding against other major currencies this morning, as worries about a possible Brexit take hold.
Sterling hit a two-month low against the US dollar in early trading, losing 0.5% or 0.7 of a cent to $1.4182, a drop of 0.7 of a cent.
Pound sell-off continues after #Brexit polls show Leave in the lead...Flight to safety: yen, gold, USTs higher pic.twitter.com/KGbQ4TZT0k
"Ahead of the referendum, many look for sterling to underperform and the yen and Swiss franc to outperform,"
"The euro and central and eastern European currencies are vulnerable, while risk assets, in general, are expected to weaken on a Brexit victory,."
7.55am BST
Asian stock markets have already suffered chunky losses overnight, with Japan's Nikkei tumbling by 3.5%.
Worries over the global economy, and Britain's EU referendum, also sent China's stock market down 2% and wiped almost 1% off the Australia market.
The market opened in Asia in the same spirit as it closed on Friday: equity markets were under heavy pressure losing more than 2% across the board
Yen crushing everything in its path -- dollar, euro, pound - as #brexit fears ramp up. https://t.co/uRqEXVfvAu pic.twitter.com/URp0a1kqWS
Related: Markets braced for choppy week as pound falls amid Brexit fears
7.37am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Has #Brexiety reached fever pitch yet?
If the global economy does not slide towards recession, the Fed will eventually raise rates (timidly). That's the best-case scenario, one in which oil-sensitive currencies can gain, but China-sensitive ones will struggle.
The risk is that growth slows more sharply in China, causing capital to take fright. Pity the currencies of nations with big current account deficits then [such as the UK]. There are other dangers lurking too, like the UK referendum, the US presidential election and rising anti-European sentiment into the 2017 elections.
Continue reading...