Continuing with its strategy of growing through acquisitions, LinkedIn Corporation LNKD recently entered into an agreement to acquire Lynda.com — an online learning company — for $1.5 billion. The transaction, expected to close by the end of this quarter, will be the company’s largest acquisition to-date.
Founded in 1995, the Carpinteria, CA-based Lynda.com offers online education and learning experience through more than 6,300 online courses and 267,000 video tutorials. The company’s courses and tutorials cover diverse fields from business and technology, photography, video and audio to other creative skills. Lynda.com charges between $250 and $375 per year for its courses which are available in a number of languages including English, German, French, Spanish and Japanese.
Under the cash-stock deal, the world’s leading professional networking company will pay nearly 52% of the transaction amount in cash and the rest in stock. The company will also absorb the majority of Lynda.com employees.
The head of global content products at LinkedIn, Ryan Roslansky, wrote in a blog that the integration of Lynda.com will help over 300 million LinkedIn users to understand and acquire the necessary skills for the available jobs in their desired locations.
Furthermore, the acquisition of Lynda.com puts LinkedIn at the forefront of the online education sector, which was a key missing piece in its portfolio. The chief financial officer at LinkedIn, Steven Sordello, revealed that the deal has opened an additional $30 billion market opportunity for the company.
Therefore, the acquisition will bring in new talent, technology and products, which will add to the company’s growing portfolio. Moreover, it will enable LinkedIn to deliver better services.
LinkedIn is a leader in the emerging online professional networking segment with increasing worldwide popularity and steady growth in the recent past. Of late, the company has adopted the acquisition-for-growth strategy.
Last year, in July, the company acquired Bizo and Newsle. Bizo’s solutions were intended to help LinkedIn in the B2B focused business and boost its Marketing Solutions segment. Through the Newsle buyout, LinkedIn gained the software which searches relevant information on the Internet faster, in turn, increasing user engagement.
These acquisitions should help the company deliver even more value to its members, which in turn will expand its customer base and create new revenue streams.
We also believe that the investments in strategic products are necessary for LinkedIn as other companies like Facebook FB and Twitter TWTR are looking to expand into the professional space.
While the continued investments to provide new and improved products and services might affect LinkedIn’s profitability in the near term, we believe that they are necessary to drive member growth and user engagement over the long haul. We remain encouraged by the 40–50% top-line growth recorded over the past few quarters.
Currently, LinkedIn has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Cirrus Logic Inc. CRUS sporting a Zacks Rank #1 (Strong Buy).
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