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Salesforce CEO Told LinkedIn He Would Have Paid Much More Than Microsoft (recode.net)

Posted by msmash on from the aftermath dept.

Ina Fried, reporting for Recode: It was already known that LinkedIn chose a potentially lower all-cash acquisition offer from Microsoft rather than take on the uncertainties of a stock-and-cash deal from Salesforce. But now it has been revealed that Salesforce might have been willing to go "much higher" than Microsoft's $26.2 billion, or change other terms of its bid, had it been given the chance. In a filing with regulators on Friday, LinkedIn said a board committee met on July 7 to discuss an email from Salesforce CEO Marc Benioff. "The email indicated that Party A would have bid much higher and made changes to the stock/cash components of its offers, but it was acting without communications from LinkedIn," LinkedIn said in the updated filing with the Securities and Exchange Commission.

45 of 64 comments (clear)

  1. And the real value is probably half by Anonymous Coward · · Score: 2, Informative

    ...of nothing.

    1. Re:And the real value is probably half by davester666 · · Score: 1

      ...and it drops in value by at least a 1/2 billion just by being associated with Microsoft.

      --
      Sleep your way to a whiter smile...date a dentist!
  2. Linkedin took the bird in hand by Anonymous Coward · · Score: 1

    Stock in the acquiring company goes down as soon as the deal becomes public, and the acquirer has to go deeper into debt to complete the deal. Then bad news comes out from either the acquirer or acquiree's latest earnings, key people leaving, etc and the stock falls some more. And there could be random external events like Brexit dropping the entire stock market.

    So cash is king.

    1. Re:Linkedin took the bird in hand by mysidia · · Score: 1

      Then bad news comes out from either the acquirer or acquiree's latest earnings, key people leaving, etc and the stock falls some more.

      So specify some extra requirements:

      • The price of the deal will be a dollar amount; the stock portion of the debt will be settled through payment to the shareholders of the acquired company by paying them shares worth 2 even dollar installments over the next 2 quarters, and a final payment of the remainder in cash, with the number of shares for each installment determined according to the average value at the date of the actual payment.
      • The previous installment will be adjusted by credit or debit against the next payment in 90 days to match the average stock price over all trading days in that period, and the next installment's dollar amount will be supplemented by or decreased by the adjustment, assure alignment with the agreed acquisition price.
      • The shares transferred to make the installments have to be shares with an issue date before the deal was agreed.
      • No additional stock shares can be written until after the deal is completely settled and paid, and shareholders of the acquired company have had 30 days of additional time to sell their shares, in case they wanted to do so.
    2. Re:Linkedin took the bird in hand by simcop2387 · · Score: 1

      The problem is that this might mean that the deal is impossible to complete. If the buyer's stock drops too low then they may not ever be able give the amount of stock, or it could end up being 100% of the buyer, which they probably can't agree to. It's too difficult and complex a deal to manage to pull off that I don't think anyone would take it seriously.

    3. Re:Linkedin took the bird in hand by mysidia · · Score: 1

      If the buyer's stock drops too low then they may not ever be able give the amount of stock, or it could end up being 100% of the buyer

      That's called an Inability to Pay for goods they want to purchase, so now they will be in default on their payments required for the acquisition.

      That means they will have to either book it as an unpaid cash debt or continue to keep the acquisitions' accounting separate, and the original shareholders retain interest in the original company; The transaction changes from an Acquisition of the entire company, to Acquisition of the part they chose to pay for after subtracting from the acquired portion: substantial penalties for failure to complete the transaction.........

  3. What I want to know is by gijoel · · Score: 4, Funny

    Will linkedin spam everyone on Microsoft's address book, to invite them to join Linkedin?

    1. Re: What I want to know is by konohitowa · · Score: 1

      How did they get your personal contacts?

    2. Re:What I want to know is by SeaFox · · Score: 1

      Probably the opposite. LinkedIn members will probably soon be receiving regular emails about Microsoft productivity products and SAAS.

    3. Re: What I want to know is by ShaunC · · Score: 1

      For a good while, if you installed the LinkedIn app on your phone, it would harvest your contacts' email addresses and send them spam for LinkedIn on your behalf. "I want you to join my professional network" or some such garbage. The permissions requested by the app were typical of social networking apps (they all "require" access to your contacts) and there was no indication to the user that LinkedIn would be sending out emails. They stopped this practice after being sued, but the behavior turned a lot of people away and permanently associated the LinkedIn brand with spam and shady activity.

      --
      Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
    4. Re: What I want to know is by vivian · · Score: 1

      I still use LinkedIn in - but probably like every other product Microsoft has bought, it's going to either become more annoying or less functional.
      I used to use hotmail - then Microsoft bought it. I ended up migrating to yahoo.
      I have use skype on Linux for many years, but the product took a turn for the worse after Microsoft bought it - very very infrequent updates (for Linux) and now instead of being able to receive PDF's directly, I am being forced to go to the online version to download and view them.
      I hope they don't screw linked in up too - makes me wonder about its viability as a professional networking tool.
      I particularly feel sorry for any Microsoft employees that use it - now their employer will know every detail about if they are looking at other companies, recruiting agents, etc - even if they are only using it from home on their own computers.

    5. Re: What I want to know is by ShanghaiBill · · Score: 1

      How did they get your personal contacts?

      When I created my Linkedin account, they asked me for my email address and password. I didn't fall for it, but my wife did, and Linkedin logged in on her behalf and sent email to every single one of her 2000+ contacts, including many casual acquaintances from years ago. This was a sleazy, and maybe illegal, action. They are a very unethical company. I still have a Linkedin account, but I don't trust them, and all my information on Linkedin is public knowledge anyway.

    6. Re: What I want to know is by SydShamino · · Score: 1

      I have never given any social networking app access to my phone contacts. I assume you are on Android?

      --
      It doesn't hurt to be nice.
    7. Re: What I want to know is by cheesybagel · · Score: 1

      Facebook does the same thing.

    8. Re: What I want to know is by ShanghaiBill · · Score: 1

      Facebook does the same thing.

      No they don't. Facebook asks, and only sends emails if you click. Linkedin did it without any authorization.

    9. Re: What I want to know is by cheesybagel · · Score: 1

      So why did you give it the password to your e-mail account in the first place?

    10. Re: What I want to know is by konohitowa · · Score: 3, Insightful

      I'm going to guess that he didn't fall for it, but that his wife did.

    11. Re: What I want to know is by ShaunC · · Score: 1

      I've never installed LinkedIn so I wasn't affected by this, but yes, the Android permission model is what made this possible. Being that it's all-or-nothing, you can't say "OK, I want to install LinkedIn but not allow it to access my contacts." Unless you root your phone, you either allow an app every permission it wants, or you can't install it. My understanding is that the most recent version of Android is supposed to mitigate this a bit, but it's anyone's guess as to if/when carriers will actually push that version out to devices on their networks. It sure hasn't shown up on my phone.

      --
      Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
    12. Re: What I want to know is by slashdotwannabe · · Score: 1

      I'm not falling for that. He's on slashdot. He's never been laid, much less married.

      --
      This comment is my opinion and does not represent an official position of Donald Trump or others I do not work for
  4. cycle of life by e**(i+pi)-1 · · Score: 4, Interesting

    Cycle of life for social network companies: start-up builds up a large user base using free services, indicating a business model with optional services, selling out to a big fish, big fish digests it, squeezing out its gut. Big fish removes free services more and more, adding advertisement. User jumps to new free service. Alternatively: start-up becomes big fish and lives from eating other alive communities, remaining the big fish, as there are no alternatives.

    1. Re:cycle of life by marcroelofs · · Score: 1

      This particular big fish has a history of making misguided buying decisions. Has M$ ever bought something that didn't either go under within 10 years of had to be written off the balance sheet?

  5. slow money is no money by turkeydance · · Score: 1

    bird in hand, and all that

    1. Re:slow money is no money by drnb · · Score: 1

      bird in hand, and all that

      Or more formally, after considering the risk premium one *must* offer *more* when offering stock not cash. Once one considers such a risk premium the stock based offer may actually be the lesser offer even when the hypothetical dollar amount is more.

  6. Who would trust either with anything but cash? by EmperorOfCanada · · Score: 1

    I wouldn't trust either company with any deal that didn't involve cutting me a cheque. I would trust salesforce not at all but at least with a cheque there is a chance they haven't completely screwed you over. With some kind of stock / options deal. Hell no.

    Microsoft has a pretty good history of buyouts resulting in the bought out company pretty much being flushed, so again, regardless of the logic, I would not do a deal that I couldn't have go complete into the toilet and still have my walking away happy.

    But if both companies made me the exact same deal, at least with MS I would trust the cheque cashing and not being somehow threatened with legal crap if I didn't give it back; if only to avoid reputational damage. With salesforce I would think, "OK, these MBA types now hold all the cards, being MBA types why wouldn't they screw me?"

    1. Re:Who would trust either with anything but cash? by Sir+Holo · · Score: 1

      In the vein of your post, I just canceled my "Premium" subscription to LinkedIn.

      They say no refunds, pro rata, but I am betting that once I do the research, California law will require such. If so, I will demand it.

      I've had a LinkedIn account since 2002. I will now update my LinkedIn account to contain only a pointer to my own, personally hosted web page (on a VPS). Sure, they will still web-scrape my personal info. But, as a professional and consultant, I need that particular information out there. It's just that I won't be blowing >$450 per year for that privilege.

      PS — I'm dumping Skype ASAP as well. The cloud is utter BS that should just blow away.

  7. What I want to know is by Frosty+Piss · · Score: 1

    Does anyone use LinkedIn anymore? It has any value at all? After spamming all my professional contacts and my personal contacts, I was out.

    --
    If you want news from today, you have to come back tomorrow.
  8. We probably dodged a bullet. by boondaburrah · · Score: 2

    I'm not sure I would be able to handle *Force and linkedin under the same roof. That's too much corporate sketchiness in one place. Granted MSFT isn't a whole lot better, but they're slightly more obvious in how they work.

  9. What? by Anonymous Coward · · Score: 3, Insightful

    How the fuck is LinkedIn worth $26 billion?

    1. Re:What? by xxxJonBoyxxx · · Score: 1

      >> How the fuck is LinkedIn worth $26 billion?

      It's become the Google of recruiting. These days, Monster and Jobs.com seem to be full of job postings that companies need to legally get out there before selecting an internal candidate or hiring an H1-B instead. You're just chasing a lot of phantom jobs out there. However, LinkedIn is where recruiters can research you instead and chase you down for positions they can't otherwise fill, which in my experience has meant a better-than-50% chance of getting the job before any interviews and above-average salary offers. So...that's why it's worth billions: it's the only place serious job seekers need to keep their resume current, and it's the only place recruiters need to find people.

    2. Re:What? by Mr+D+from+63 · · Score: 2

      How the fuck is LinkedIn worth $26 billion?

      It is worth what the market bears. Your question should be; Why does the market bear so much?

    3. Re:What? by ultranova · · Score: 1

      Why does the market bear so much?

      Because it's a bear market. And Microsoft is a has-been who can't make anyone want to "upgrade" to their newest OS even for free. So their future, if they are to have any, is in acquiring other, possibly relevant companies, and that's best done in a bear market when they're cheap.

      --

      Forget magic. Any technology distinguishable from divine power is insufficiently advanced.

    4. Re:What? by bazorg · · Score: 1

      In terms of actual money changing hands, perhaps this is a way to get a lot of business networking to go through Skype rather than other VOIP services. In a beautiful slide deck that MS is distributing, there are some ideas about how Dynamics CRM and Office365 will use Linkedin, possibly in the same way that G+ contacts can be seen from Google search results and Gmail/Hangout contacts.

      In a broader "let's do stuff for money and offer other stuff for free and hope this somehow works", maybe because it's the one social network with many millions of people that could have been acquired, thus keeping MS in a game where major companies want to sell hardware, software and a variety of cloud services. Twitter does a lot less than Linkedin, Facebook/Instagram and G+ are probably not for sale, and I heard that MySpace is taken :D

  10. Huh? by c · · Score: 3, Funny

    Microsoft buying LinkedIn for as much as they did was batshit. We're supposed to believe that Salesforce is even further out there and brought more money?

    --
    Log in or piss off.
    1. Re:Huh? by Anonymous Coward · · Score: 1

      We're supposed to believe that Salesforce is even further out there and brought more money?

      Sure, why not? Hell, I was going to offer twice as much as Saleforce, if MS hadn't beaten me to it.

    2. Re:Huh? by Attila+Dimedici · · Score: 1

      I actually see the value of LinkedIn to SalesForce. There is a potential synergy (I know a much overused word) there that brings benefit to SalesForce, their customers and some percentage of LinkedIn users. With Microsoft buying LinkedIn all of the benefits go to Microsoft (and possibly a fraction of their customers). LinkedIn users gain nothing from Microsoft buying LinkedIn.

      --
      The truth is that all men having power ought to be mistrusted. James Madison
    3. Re:Huh? by c · · Score: 1

      I actually see the value of LinkedIn to SalesForce.

      It's not so much a question of whether there's value; it's whether there's more than $26 billion of value to anyone.

      --
      Log in or piss off.
    4. Re:Huh? by Attila+Dimedici · · Score: 1

      I really don't know what the value of LinkedIn is to SalesForce, but it is something they cannot get any other way. That makes its value higher than it would otherwise be. Of course, you may be correct that $26 billion is too high. I suspect that Microsoft's thinking was that no price was too high to obtain LinkedIn since, by acquiring LinkedIn they gained something they could not get in any other way. The problem with that from my perspective is that LinkedIn is less useful with MS owning it.

      I suspect that MS thinks they can combine LinkedIn with Yammer to create something that will compete with Facebook (although not directly). It won't work.

      --
      The truth is that all men having power ought to be mistrusted. James Madison
  11. Re:Linkedin not worth $26B by doconnor · · Score: 1

    Why don't they return the money to shareholders? Even if there are taxes to pay, it's better to writing down 99% of the value over the next 5 years.

  12. consequences? by manu0601 · · Score: 1

    Can the SEC filling have consequences? Can it lead to cancel the sales to Microsoft? Or result in a fine?

    1. Re:consequences? by Scutter · · Score: 1

      I bet there's more than one shareholder lawsuit out of this. It suggests that the board was negligent in conducting due diligence.

      --

      "Tell me doctor, with all of your defenses, are there any provisions for an attack by killer bees?"
    2. Re:consequences? by SlashdotOgre · · Score: 1

      This will almost certainly lead to a law suite by some large shareholder claiming the board of directors failed to perform their fiduciary duties (specifically their "duty of care" which basically says the board has to perform due diligence on all alternatives and choose the one that's best for the company). Since what's "best" is subjective, this is actually fairly typical and borderline inevitable with any large M&A transaction. There's very often some party that feels the board should have taken some alternate deal and by not doing so they've been materially damaged. If this goes to court, the board will demonstrate that their investment banking advisor (Qatalyst Partners if I recall correctly) demonstrated to them that they took the best deal on the table, and the other party will come up with arguments against it. Regardless of the outcome, and barring something crazy, the transaction will with MS will still go through regardless of this lawsuit's outcome.

      --
      Sadly, PS/2 was yet another victim of USB, which doesn't care what you plug into it, the electrical slut.
  13. This is why you bring your A-game to the table. by Chas · · Score: 1

    I've seen it before. Companies that would be willing to drop millions (or billions) turned away. Simply because they attempted to lowball their first bid.

    Also, they fail to communicate that this is a preliminary offer, and that if it's not acceptable, there's lots of room for negotiation.

    As such, valuable prizes walk away from them.

    --


    Chas - The one, the only.
    THANK GOD!!!
  14. I removed myself from Linkedin on the very day by hughbar · · Score: 1

    I removed myself from Linkedin on the very day that Microsoft bought it. I'm not a totally rabid anti-Microsoft, but there's a sustained history of unpleasant business practices. I don't want them in my professional life, such as it is, at 65. People may say (somewhat rightly) that I have that option.

    However, here is a thought experiment. If everyone closed their Linkedin account, then Microsoft is immediately out $26 billion, no rioting, no police or lawyers, nothing. This is rather beneficial flip side of if it's free, you are the product, more like if you can de-subscribe, you control the value of the product, less elegant but truthy.

    --
    On y va, qui mal y pense!
  15. Re:Linkedin not worth $26B by cheesybagel · · Score: 1

    Microsoft used to be known for not paying dividends at all.

  16. Comment removed by account_deleted · · Score: 1

    Comment removed based on user account deletion