How to handle MSFT buyout of LNKD

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Meowzers
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How to handle MSFT buyout of LNKD

Post by Meowzers » Mon Jun 13, 2016 1:45 pm

Hi all,

My wife used to work at LNKD and owns stock through an incentive RSU plan. She's held onto them for several years and with the announcement today that MSFT is buying the company she is wondering how best to handle the situation. Should she sell? Thanks in advance!

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ray.james
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Re: How to handle MSFT buyout of LNKD

Post by ray.james » Mon Jun 13, 2016 1:47 pm

I would look at Long term capital gains. If I am not wrong, for RSU it is a 2 year period since they vested? Selling those at increased price will be awesome. For stock that is still to turn long term, well it is up to you depending on tax situation.

IMP: Do know that there is the risk of the deal falling through in future and the stock price might fall.
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123
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Re: How to handle MSFT buyout of LNKD

Post by 123 » Mon Jun 13, 2016 1:51 pm

Regretfully, history seems to show that MSFT has botched-up many acquisitions. Whatever business didn't get messed up before the deal closed went into the toilet after the deal closed. I'd sell ASAP.
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arizonaslim
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Re: How to handle MSFT buyout of LNKD

Post by arizonaslim » Mon Jun 13, 2016 2:04 pm

For some strange reason, I'm reminded of Microsoft's acquisition of Nokia. Fat lotta good that did both companies.

Sconie
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Re: How to handle MSFT buyout of LNKD

Post by Sconie » Mon Jun 13, 2016 2:39 pm

For the life of me, I can't understand why MSFT would want to lay-out that kind of money for Linked-In......criminey! I'd be prone to sell. YMMV....
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icefr
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Re: How to handle MSFT buyout of LNKD

Post by icefr » Mon Jun 13, 2016 2:40 pm

I would probably be selling the LNKD shares to diversify. Today. Then again, I keep zero stock in any employer I've worked for other than through Vanguard Total Stock Market index.

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stratton
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Re: How to handle MSFT buyout of LNKD

Post by stratton » Mon Jun 13, 2016 7:58 pm

From the FT's Alphaville blog

Image
...and then Buffy staked Edward. The end.

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abuss368
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Re: How to handle MSFT buyout of LNKD

Post by abuss368 » Mon Jun 13, 2016 9:45 pm

I am still trying to understand this transaction.
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Watty
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Re: How to handle MSFT buyout of LNKD

Post by Watty » Mon Jun 13, 2016 10:20 pm

abuss368 wrote:I am still trying to understand this transaction.
It is simple. A quick search show that there are supposedly about 400 million people with LinkedIn accounts.

Microsoft paid $26 Billion for it. That is $65 per account....

Er, I don't understand it either. :oops:

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ray.james
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Re: How to handle MSFT buyout of LNKD

Post by ray.james » Mon Jun 13, 2016 10:33 pm

Watty wrote:
abuss368 wrote:I am still trying to understand this transaction.
It is simple. A quick search show that there are supposedly about 400 million people with LinkedIn accounts.

Microsoft paid $26 Billion for it. That is $65 per account....

Er, I don't understand it either. :oops:
This is the thing that baffles me. Unlike facebook acquisition of whatsapp at $21 per user, this has no real millions of active users. People use them for job search and then back to dormant stage. A small group of active community and that may even disappear now. They cannot charge thousands of dollars for job search.

Very strange acquisition!
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toast0
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Re: How to handle MSFT buyout of LNKD

Post by toast0 » Mon Jun 13, 2016 11:28 pm

The transaction as described in the SEC filings is for all cash; so if the deal closes, it will be a taxable event at that time. Some things I would think about:

a) Holding periods: if you've already held the stock for long enough to get preferential tax treatment, great. If not, you might want to consider if you're likely to reach the threshold before the deal closes -- if you are close, you may not want to sell right away; if it's far away, then it might not be realistic to hit the threshold.

b) likelyhood of deal closing: you'll lose about $4/share (just about 2%) off the final sale price if you sell now; but the deal might not go through -- if it doesn't, the stock may go back to what it was trading at last week. Do you want to hold the stock and take the risk, or cash out now?

c) tax years -- clearance of the deal (anti-trust and shareholder approval), may take some time, if it takes more than six months, you may want to sell some shares in this tax year, and some in future tax years.

d) right of a appraisal: if you don't feel the price is fair, you may wish to avail yourself of the right to appraisal in Delaware law. The procedural requirements are a bit arcane, so you would want to look into it now. Dell shareholders who met the procedural requirements recently received a 28% premium (plus interest from the merger date); but that's just one high profile case.

sfnerd
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Re: How to handle MSFT buyout of LNKD

Post by sfnerd » Mon Jun 13, 2016 11:47 pm

Not too strange a deal at all... Microsoft has Office 365, CRM, cloud, and other services that would potentially go well with LinkedIn's user base. Imaging if Office 365 now gives you LinkedIn Premium access, or vice versa. Decent cross-sell opportunity. Who knows if they'll screw it up, but the deal makes sense.

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Re: How to handle MSFT buyout of LNKD

Post by pshonore » Tue Jun 14, 2016 8:10 am

I don't understand it either. What kind of cash flows does LNKD generate to support a 26 Billion price tag? Certainly nothing like Facebook. But then I've never understood that whole advertising, etc model. How many Bogleheads click on ads?

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Re: How to handle MSFT buyout of LNKD

Post by moshe » Tue Jun 14, 2016 11:50 am

sfnerd wrote:Not too strange a deal at all... Microsoft has Office 365, CRM, cloud, and other services that would potentially go well with LinkedIn's user base. Imaging if Office 365 now gives you LinkedIn Premium access, or vice versa. Decent cross-sell opportunity. Who knows if they'll screw it up, but the deal makes sense.
Doesn't this assume that most LinkedIn and Office users bases are made up of different individuals? I find this hard to accept.

Sales teams may benefit from the integration but how does the average worker that has both accounts types benefit on a daily basis? Job searching at work? Hmm....i'm sure that will go over well with management.

This advice is worth what you paid for it but if i held either equity i would be liquidating today regardless of the tax implications. The risk of perceived value loss is too high for both firms with any merger or execution hiccups.

~Moshe
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Re: How to handle MSFT buyout of LNKD

Post by inbox788 » Tue Jun 14, 2016 12:07 pm

ray.james wrote:This is the thing that baffles me. Unlike facebook acquisition of whatsapp at $21 per user, this has no real millions of active users. People use them for job search and then back to dormant stage. A small group of active community and that may even disappear now. They cannot charge thousands of dollars for job search.

Very strange acquisition!
But headhunters routinely do, and many companies willingly pay those if they get the right candidates. Acquiring good employees is a costly expense and we're in a low period right now. As the economy picks up and fewer unemployed folks are available to be picked up, the poaching will increase and LNKD activity will go up as well.

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nyknicks4412
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Re: How to handle MSFT buyout of LNKD

Post by nyknicks4412 » Tue Jun 14, 2016 3:37 pm

Can sell now and lock in most of the premium if the deal falls through or wait and take it all if the deal closes. Market seems pretty confident the deal will go ~2% chance based on current share price it won't. There may be some benefits to timing your taxable event but I believe the deal is expected to close this year.

sfnerd
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Re: How to handle MSFT buyout of LNKD

Post by sfnerd » Tue Jun 14, 2016 10:20 pm

moshe wrote:
sfnerd wrote:Not too strange a deal at all... Microsoft has Office 365, CRM, cloud, and other services that would potentially go well with LinkedIn's user base. Imaging if Office 365 now gives you LinkedIn Premium access, or vice versa. Decent cross-sell opportunity. Who knows if they'll screw it up, but the deal makes sense.
Doesn't this assume that most LinkedIn and Office users bases are made up of different individuals? I find this hard to accept.

Sales teams may benefit from the integration but how does the average worker that has both accounts types benefit on a daily basis? Job searching at work? Hmm....i'm sure that will go over well with management.

This advice is worth what you paid for it but if i held either equity i would be liquidating today regardless of the tax implications. The risk of perceived value loss is too high for both firms with any merger or execution hiccups.

~Moshe
I'm not advocating either stock; I don't hold either (and I actually was fairly negative on LinkedIn's pre-merget prospects in general, despite knowing several people who work there). I'm just saying that there are obvious synergies. For the overlapping part of the user bases, it would bring additional functionality... like a workplace-aware Cortana that uses your social graph to suggest people that should attend meetings, or that can help you with a particular problem you're facing at work. Bringing Microsoft's research staff to bear on LinkedIn's social data is huge. Is it $26+ billion huge? I don't know. But the acquisition does fundamentally make a lot of sense.

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Re: How to handle MSFT buyout of LNKD

Post by Tommy » Wed Jun 15, 2016 12:33 am

sfnerd wrote:
moshe wrote:
sfnerd wrote:Not too strange a deal at all... Microsoft has Office 365, CRM, cloud, and other services that would potentially go well with LinkedIn's user base. Imaging if Office 365 now gives you LinkedIn Premium access, or vice versa. Decent cross-sell opportunity. Who knows if they'll screw it up, but the deal makes sense.
Doesn't this assume that most LinkedIn and Office users bases are made up of different individuals? I find this hard to accept.

Sales teams may benefit from the integration but how does the average worker that has both accounts types benefit on a daily basis? Job searching at work? Hmm....i'm sure that will go over well with management.

This advice is worth what you paid for it but if i held either equity i would be liquidating today regardless of the tax implications. The risk of perceived value loss is too high for both firms with any merger or execution hiccups.

~Moshe
I'm not advocating either stock; I don't hold either (and I actually was fairly negative on LinkedIn's pre-merget prospects in general, despite knowing several people who work there). I'm just saying that there are obvious synergies. For the overlapping part of the user bases, it would bring additional functionality... like a workplace-aware Cortana that uses your social graph to suggest people that should attend meetings, or that can help you with a particular problem you're facing at work. Bringing Microsoft's research staff to bear on LinkedIn's social data is huge. Is it $26+ billion huge? I don't know. But the acquisition does fundamentally make a lot of sense.
Of course it make sense. Haven't aQuantive acquisition made sense? Absolutely. $6B ... Down to the toilet. Nokia? It made sense, only $8B . Went same way. LinkedIn? Yes, Ms will get its own social network. $26B. Will see.

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ray.james
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Re: How to handle MSFT buyout of LNKD

Post by ray.james » Wed Jun 15, 2016 12:54 am

sfnerd wrote:
I'm not advocating either stock; I don't hold either (and I actually was fairly negative on LinkedIn's pre-merget prospects in general, despite knowing several people who work there). I'm just saying that there are obvious synergies. For the overlapping part of the user bases, it would bring additional functionality... like a workplace-aware Cortana that uses your social graph to suggest people that should attend meetings, or that can help you with a particular problem you're facing at work. Bringing Microsoft's research staff to bear on LinkedIn's social data is huge. Is it $26+ billion huge? I don't know. But the acquisition does fundamentally make a lot of sense.
I do not think browsing LinkedIn is viewed as positive/acceptable at any workplace. While I understand what you are saying, that overlapping value is negligible. There is stackoverflow and its sub branches to solve most of the tech issues. There is hackernews, reddit solving other things apart from traditional facebook etc. In my view, linkedin's social data is not even worth advertising dollars, like in case of facebook. It had 100M active users and the definition used is - they login atleast once a month. Even with in that, most of them just accept new friend request and do nothing more.

What does make sense is recruiters paying money. But just not on this valuation level. Finding a good candidate costs money and at some point it involves human. So while linkedin is tool that takes a few percentage, the person - headhunters/recruiters makes most of the commission. I do think linkedin has most functional value among the tech titans - esp for STEM job search. Just the valuation and Microsoft acquisition is surprising.
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Re: How to handle MSFT buyout of LNKD

Post by KyleAAA » Wed Jun 15, 2016 9:34 am

It's a cash deal so as long as it goes through, cash will be deposited in your account. You don't really need to DO anything unless you think the deal won't close for some reason. I personally think it's a really good acquisition in principal but for the price? Only time will tell on that. EBITDA should crack $1 billion this year so it's not like they aren't generating plenty of cash and their data is EXTREMELY valuable to Microsoft. Will almost certainly add value to customers of both companies. Just maybe not enough to justify the sale price.

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Re: How to handle MSFT buyout of LNKD

Post by Nearly A Moose » Wed Jun 15, 2016 11:29 am

OP - You might ask yourself how much more you stand to gain by waiting it out until the deal actually closes versus how much you stand to "lose" if the deal falls apart ("lose" in quotes because you don't actually have anything but a digital piece of paper right now...). Then I'd take potential tax issues in consideration, such as short-term and long-term gains. If taxes aren't relevant, I'd personally sell now and lock in that gain. If someone told you several years ago when your wife got those shares that she could sell them today for $191 a pop, would you have thought that was a great investment? I don't know that I'd feel inclined to risk losing a large percentage of that to get the additional ~$5 per share. But I'm a bit conservative, as I've seen plenty of deals fall through (not from a personal investing perspective as I don't own individual stocks, but from my profession).
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

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