Twitter, Yelp Rise After Microsoft Strikes Deal To Buy Linkedin

Shares of Twitter (TWTR) and Yelp (YELP) are rising in pre-market trading after Microsoft (MSFT) announced a definitive agreement to acquire and LinkedIn (LNKD) for $196 per share in an all-cash transaction valued at $26.2B, inclusive of LinkedIn's net cash.

Satya Nadella, CEO of Microsoft, said, "The LinkedIn team has grown a fantastic business centered on connecting the world's professionals. Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet."

Microsoft will finance the transaction primarily through the issuance of new indebtedness. Upon closing, Microsoft expects LinkedIn's financials to be reported as part of Microsoft's Productivity and Business Processes segment. Microsoft expects the acquisition to have minimal dilution of ~1 percent to non-GAAP earnings per share for the remainder of fiscal year 2017 post-closing and for fiscal year 2018 based on the expected close date, and become accretive to Microsoft's non-GAAP earnings per share in Microsoft's fiscal year 2019 or less than two years post-closing.

Non-GAAP includes stock-based compensation expense consistent with Microsoft's reporting practice, and excludes expected impact of purchase accounting adjustments as well as integration and transaction-related expenses. Following the deal announcement, LinkedIn shares are up about 48% in pre-market trading, while Twitter shares are up 5.5% and Yelp is up about 3.5%.