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Pro: Microsoft-LinkedIn Merger Is A 'Win-Win Proposition'

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Pro: Microsoft-LinkedIn Merger Is A 'Win-Win Proposition'

Microsoft Corporation (NASDAQ: MSFT)'s $26.2 billion merger with LinkedIn Corp (NYSE: LNKD) has some analysts, such as Global Equity Research's Trip Chowdhry, scratching their heads and failing to understand the rational behind the acquisition.

However, Santosh Rao of Manhattan Venture Partners thinks the acquisition is a "win-win proposition" for both companies. Speaking as a guest on CNBC Tuesday morning, the professional researcher explained why he likes the deal.

Related Link: Good For LinkedIn, "Terrible" For Microsoft

According to Rao, both companies will benefit from the merger, but LinkedIn will benefit even more after the company's most recent quarterly earnings showed its "growth engine was kind of slowing down despite new product initiatives." On the other side of the deal, Microsoft is "always looking for an edge," and its CEO Satya Nadella "knows exactly what he wants" and in what direction to take the company.

Rao acknowledged that investors looking for the financial rational toward the deal "won't get it," as the transaction is "on the expensive side." Nevertheless, Microsoft can afford the deal at $26.2 billion given its cash-on-hand balance, which exceeds $100 billion.

Nevertheless, Rao added that removing financials from the equation, the deal fills several holes in Microsoft's portfolio in terms of mobile, cloud, and more importantly, the company's social presence.

 

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