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Microsoft To Acquire Business Social Network Yammer For $1.2 Billion

June 15, 2012

Microsoft will reportedly acquire Yammer Inc., a cloud-based social network for business collaboration, for $1.2 billion, the Wall Street Journal reported late Thursday, citing a source familiar with the matter.

It is unclear when the acquisition will be completed and announced, according to the source.

Bloomberg News had reported news of a potential acquisition earlier in the day on Thursday, citing sources familiar with the negotiations.

Spokespersons for Microsoft and San Francisco-based Yammer have so far declined to comment on any potential deal.

David Sacks, former chief operating officer at PayPal Inc., founded Yammer in 2008. The company´s social network includes features similar to those found on Facebook, but is designed for internal corporate use. The software is now used by more than 200,000 companies, including eBay and Ford Motor Co.

Yammer, which also sells file-sharing tools and other software, has raised more than $142 million from venture-capital investors. Its rivals include Jive Software Inc., Chatter, run by Salesforce.com, and Asana Inc., Facebook co-founder Dustin Moskovitz´s company.

If the deal is finalized, it would be the second time in about a year that Microsoft acquired a company on its way to a potential initial public offering. Last May, Microsoft agreed to buy video-calling service Skype SARL for $8.5 billion, the biggest acquisition in Microsoft´s history. Skype had filed documents to take the company public, but was simultaneously pursuing a possible sale.

The purchase of Yammer could add new social features to Microsoft Office, which has for years generated more than half of Microsoft´s annual operating income.

Although the company´s Office Division already has a product, SharePoint, with some of the same features as Yammer, many customers use it as back-end software to power internal corporate websites, rather than for document sharing or social networking.

Large IT companies are rapidly acquiring tech startups, having spent some $17.4 billion on enterprise software acquisitions last year alone, compared with $715.5 million spent in 2009, according to Bloomberg.

Indeed, a number of enterprise software purchases centered on social media have taken place recently. Earlier this month, Salesforce.com acquired social-marketing tools through its $745 million purchase of Buddy Media Inc., while Oracle recently bought two companies — Vitrue Inc. and Collective Intellect Inc. — that analyze data on social media sites.

Shares of Microsoft´s stock rose 0.72 percent on Thursday, closing at $29.34. Shares of Jive, which went public in December, were up 11.6 percent, closing at $18.67.


Source: redOrbit Staff & Wire Reports



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