Microsoft to buy Yammer for $1.2 billion

Mon Jun 25, 2012 4:26pm EDT
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By Bill Rigby

SEATTLE (Reuters) - Microsoft Corp agreed to buy online social network firm Yammer Inc for $1.2 billion in cash, which will allow the software company to offer a service like Facebook Inc's to corporate customers.

Talk of a deal had circulated earlier this month, but the two companies only confirmed an agreement on Monday.

Four-year-old Yammer, which has 5 million users of its private, in-company social networks, helps companies' internal communications and collaboration by allowing employees to form groups and interact with each other freely. Companies such as Ford Motor Co, Supervalu and Deloitte are customers.

The 400-employee firm will keep its headquarters in San Francisco but will become part of Microsoft's Office unit under Kurt DelBene in Seattle. Yammer will still be led by current CEO David Sacks, a former PayPal executive.

The service should fill a growing gap that Microsoft was struggling to fill with its SharePoint application for creating private websites for intra-company projects.

"This acquisition will immediately make Microsoft a strong competitor in the enterprise social market," said Larry Cannell, an analyst at tech research firm Gartner. "It was a stretch to call the capabilities in SharePoint's MySite feature a social network site."

With Yammer, employees can use a private, online company directory to contact co-workers, form networks, chat, share links and post news. A basic version of Yammer is free, but a subscription buys more security and integration with other company-wide software. Yammer's subscription-based business model makes it different from ad-driven network companies like Facebook or LinkedIn Corp.

The deal, which values Yammer's users at about $240 each, may ignite interest in companies offering similar services, such as Inc, Jive Software Inc and Telligent.   Continued...

Yammer CEO David Sacks (L) and Microsoft CEO Steve Ballmer shake hands after announcing Microsoft will acquire Yammer for $1.2 billion cash in San Francisco, June 25, 2012. REUTERS/Lou Dematteis/Microsoft/Handout