Bidding war between Microsoft and Salesforce over LinkedIn raised price by $5bn

Facebook and Google also reportedly interested in buying LinkedIn

New documents filed with the Securities and Exchange Commission (SEC) reveal a bidding war between Microsoft and Salesforce over LinkedIn, which pushed up the price for the winning bidder by 22 per cent or approximately $5bn.

Microsoft eventually prevailed, scooping up LinkedIn for a 50 per cent premium over its pre-bid stock price, paying $26.2bn for the business social networking website. A third company - not named in the SEC filing - was also interested in acquiring LinkedIn, according to the filing. Bloomberg has suggested that the third company was Facebook, while Google was also interested.

"On February 16, 2016, Jeff Weiner, LinkedIn's chief executive officer, met with Satya Nadella, Microsoft's chief executive officer, to discuss the ongoing commercial relationship between the companies and ways to enhance it. At this meeting, Messrs. Weiner and Nadella discussed ways in which the two companies could work together more closely and, in the context of that discussion, among other things, the concept of a business combination was raised," suggests the filing.

While Weiner suggested that the company was not for sale, Nadella took an acquisition proposal to the Microsoft board for their approval. It continues: "On March 16, 2016, Mr. Nadella spoke with Mr. Weiner, at which time Mr. Nadella confirmed that Microsoft was interested in pursuing an acquisition of LinkedIn and that Microsoft had begun work on the project."

While the board of LinkedIn preferred Microsoft's offer over Salesforce's on the grounds of "certainty of value", by playing off the various interested parties throughout May and early June until a deal was formally agreed, LinkedIn CEO Weiner was able to force Microsoft to up its initial offer, as well as raising the cash element of its offer.

Indeed, LinkedIn persuaded Microsoft to raise its offer even after going into exclusive talks with Microsoft, which would have obliged it to pay a $725m break-up fee.