Software giant Microsoft Corporation (NASDAQ: MSFT) has reached an agreement to acquire Yammer Inc., an online social network firm.
Microsoft agreed to acquire Yammer for $1.2 billion in an all-cash transaction. Rumors of MSFTâ€™s acquisition of Yammer had surfaced earlier in the month. However, the two companies confirmed an agreement on Monday.
Founded four years ago, Yammer currently has 5 million users for its private in-company social networks. Yammer allows employees to form groups and interact with each other freely, thus helping companiesâ€™ internal communications and collaboration. Yammer, which is based in San Francisco, counts companies such as Ford Motor Co. (NYSE: F), Supervalu Inc. (NYSE: SVU) and Deloitte as its customers. The company has 400 employees.
On completion of the transaction, Yammer will continue to operate from its San Francisco headquarters. However, the company will become part of MSFTâ€™s Office unit under Kurt DelBene in Seattle. David Sacks will remain as Yammerâ€™s CEO following the acquisition.
The acquisition of Yammer would enable Microsoft to fill a gap that the company was not able to fill with SharePoint application. According to Gartner analyst Larry Cannell, the acquisition will immediately make Microsoft a strong competitor in the enterprise social market.
CEO Steve Ballmer said that the acquisition of Yammer underscores MSFTâ€™s commitment to deliver technology that businesses need and people love. Ballmer said that Yammer adds a best-in-class enterprise social networking service to MSFTâ€™s growing portfolio of complementary cloud services.
Yammerâ€™s CEO said that Yammer had a vision for how social networking could change the way we work and joining MSFT will accelerate that vision and give Yammer access to the technologies, expertise and resources it will need to scale and innovate.
MSFT shares are marginally higher in trading today. At last check, the stock was trading 0.60% higher at $30.05 on volume of 23.40 million.