Possible Outcomes For The EU's Ruling On Microsoft/LinkedIn Deal

With just a day to go for the European Union's verdict on the Microsoft Corporation MSFT–LinkedIn Corp LNKD deal, it is imperative that traders position themselves for the likely scenarios that could materialize.

The Deal

Microsoft announced in June it would acquire LinkedIn for $196 per share in cash, with the total deal value at $26.2 billion.

At that time, Microsoft said it expected the deal to be consummated by conclusion of this calendar year. In its fiscal year first-quarter earnings report released on October 20, the company reiterated the time frame, stating that the closure was expected in the second quarter of fiscal year 2017.

Salesforce.com Objects

Microsoft has ruffled EU's feathers many times in the past, with the software giant having had to pay more than $2.3 billion dollars in fines to the union. This time around, the opposition came at the behest of salesforce.com, inc. CRM, which had unsuccessfully courted LinkedIn. Citing sources, the New York Times reported that walesforce.com was concerned about the deal giving Microsoft an unfair advantage over rivals by combining its own software services with the information held by the social network and the vast collection of data held by LinkedIn being made unavailable.

A Reuters report released in November suggested that Microsoft has informed the EU that it is willing to make concessions, including giving access to other professional social networks to its application program interface and option to hardware makers to install either LinkedIn or rival networks on computers, after the latter expressed concerns about the deal.

With Microsoft having made the move to appease the EU, which is concerned about the company packaging products to take on competition, three possibilities could ensue:

1. The EU, which apparently has sought views on concessions from competitors and customers, may accept these.
2. Unhappy with the concessions doled out, the EU could ask for more just as Dickens' Oliver Twist did.
3. Alternatively, the EU could open an investigation, which would take months to resolve.

An investigation could place the deal in a limbo at least for the near term and would be the least preferred outcome of the EU scrutiny. However, odds of a EU approval have improved notably, suggesting that the EU antitrust clearance would be secured without any further complications.

At Time Of Writing

• Microsoft shares were up 1.35 percent at $60.05.
• LinkedIn was adding 0.05 percent at $195.30.