We are recommending a long in LinkedIn (LNKD) common shares at current levels ($188/share). We believe that the recently announced acquisition of LNKD by Microsoft will likely close within the next 2-3 months (and as soon as shortly after November 22).At the acquisition price of $196 per share, this represents an arb spread of 4.3% and an annualized return of 17% to 50%+.
On June 13, Microsoft (MSFT) announced an all-cash acquisition of LNKD at $196 per share (~$26.2 billion)
On August 19, LNKD shareholders approved the acquisition by MSFT.
·The transaction has already been reviewed and cleared unconditionally in the US, Canada and Brazil.
·LNDK/MSFT is awaiting regulatory approval from the European Commission on Competition, which is expected to rule on November 22.
·In September, Salesforce (CRM) which was rumoured to be interested in acquiring LNKD, sought to block the transaction on antitrust issues.
·Obtaining regulatory approval is the lone major factor to deal closing. Wwhile predicting EU regulatory rulings is no easy task, we believe that the transaction has a high probability of closing. At the heart of the matter is LNKD's massive data-set, which Salesforce is complaining that it could provide MSFT with an unfair advantage. However, judging by fairly recent transactions which included the acquisition of rich data-sets, the EU has approved deals such as GOOG/Doubleclick and Facebook/Whatsapp. Furthermore, it can be argued that Salesforce never had access to LNKD's datas-set to begin with.
I do not hold a position with the issuer such as employment, directorship, or consultancy. I and/or others I advise do not hold a material investment in the issuer's securities.