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Billion Dollar Buyouts: Microsoft’s 12 Biggest Business Acquisitions

Tech giant, Microsoft Corp (MSFT.O) recently announced it was acquiring "Call of Duty" videogame maker Activision Blizzard (ATVI.O) for $68.7 billion in cash.

Being one of the biggest deals in the technology sector, the deal is said to help the Xbox maker become the third-largest gaming company by revenue.

Companies acquire other companies for various reasons, whether it be seeking economies of scale, diversification, or obtaining greater market share.

Since Microsoft’s first acquisition in 1987, it has made twelve acquisitions worth over one billion dollars. But, who were the companies involved in Microsoft bold buys?

The team at Betway has rounded up these twelve big-budget acquisitions in the order they were made, Microsoft’s reason behind the business move and whether the move was a success or not.

Visio Corporation - 2000

In late 1999, Microsoft announced they were planning on buying Visio Corporation, a maker of diagramming and technical drawing software.

For a staggering $1.3 billion stock deal, this aimed to help Microsoft fill a gap in its line of business products.

Visio, founded in 1990 and based in Seattle, at the time said its software was being sued by three million customers, so it is clear as to why Microsoft had an eye on it.

An industry analyst at the time said, ''There are very few areas Microsoft is not a player in,” however Microsoft clearly wanted to continue spreading its wings.

Navision - 2002

On July 11, 2002, Microsoft Corp, announced that it has acquired Navision, purchasing its shares for approximately $1.45 billion (U.S.)/1.48 billion euros/10.97 billion Danish krones in stock and cash.

Following the confirmation of this deal, Microsoft’s Business Solutions lead, Doug Burgum, said “Together, we have the people, products and technologies to bring to life Microsoft’s mission of enabling people and businesses around the globe to realize their full potential.”

At the time Microsoft’s goal was to have a strong U.S. presence in the SMB market for business planning software, therefore the addition of Navision gave Microsoft a presence it previously lacked in the EMEA market.

Known as Microsoft Dynamics NAV after a rebrand in 2018, the enterprise resource was then superseded by Microsoft Dynamics 365 Business Central shortly after.

aQuantive - 2007

In 2007, Microsoft announced it was acquiring advertising network aQuantive for roughly $6 billion in an all-cash transaction.

The public company at the time had a market cap of just $2.8 billion, and with the acquisition price of $6 billion, which was roughly two times the premium on the closing price at the time.

It seems the deal was an indication of Microsoft's efforts to catch up in the growing online advertising space, following recent moves by rivals Yahoo and Google.

Microsoft’s Chief Operating Officer claimed, “The deal takes our advertising business to a new level."

However, five years after buying aQuantive, Microsoft wrote down the acquisition as a loss and former employees said that the teams were unable to overcome a culture clash between the engineering-centric culture of Microsoft with the advertising-centric mindset of aQuantive.

Fast Search & Transfer- 2008

A year later, Microsoft bought one of the world's top makers of business-intelligence software for its expanding stable of deluxe, high-end programs aimed at large corporations.

The company agreed to pay 6.6 billion Norwegian kroner for Fast Search & Transfer of Osloto, giving Microsoft its first search engine designed specifically for large companies, which are increasingly using so-called intelligence software to analyze their vast internal databases.

Analysts said this opportunity will give Microsoft a professional-level search engine to complement search software like Web engine MSN Live Search or Microsoft Search Server and SharePoint Server for small businesses.

At the time the global market for business intelligence software was predicted to grow by 12 per cent, from $815.5 million to $913 million in 2009, hence Microsoft’s money-making move.

Skype - 2011

Thought of as not just one of its biggest purchases, but also one of its gambles at the time, in 2011 Microsoft forked out a staggering $8.5bn to have Skype’s communications software on side.

The deal was to make a big move into the IP communications space, as well as for Skype’s huge audience and its peer-to-peer video chat.

Whilst this was one of their most unexpected moves to date, there were several reasons the company were so interested in Skype, not least its user base, with hopes to sell other products to Skype's huge user base, and peer to peer video, believing that Skype adds another potentially more efficient and easier way to place video calls.

Their other interesting reason was rumours of other companies' interest. Whilst Microsoft made a fairly generous offer back in April - well over the $7 billion that Skype insisted on as a starting point - because it had heard rumours that other companies like Cisco, Google, and Facebook were interested in Skype as well.

Yammer - 2012

In 2012, Microsoft agreed to acquire Yammer, a maker of cloud-based ESN (Enterprise Social Networking) software, for $1.2 billion in cash.

Former Microsoft executive Kurt DelBene said “Yammer will be an important addition to Microsoft's cloud services and this acquisition underscores our commitment to helping customers move to the cloud. Together we'll deliver the most complete solution in the marketplace.”

One of the reasons behind the deal was that Yammer struck a balance between fostering "viral" adoption of its product while also giving IT departments security and management features they needed.

Now that Yammer has grown to over 1 million total users on the platform, it seems this was the right business move for both companies.

Nokia's mobile and devices division - 2013

In 2013, one of the most enticing "what-ifs" came true as Microsoft purchased Nokia's devices and services unit.

Paying €3.79 billion for Nokia's business, plus another €1.65 billion to license its portfolio of patents, the purchase came off the back of what appeared to be a failed acquisition in June that year when talks of Microsoft buying Nokia’s phone business came to a halt.

Their reason was to give themselves the kind of end-to-end control in mobile that only Apple and BlackBerry have enjoyed, and a critical measure of quality control. That’s one was to become a "devices and services company."

After what was known as a tricky and risky business deal, reports claim Microsoft had wasted at least $8 billion on its failed Nokia experiment, including the costs of restructuring and severance payments for thousands of employees.

When Microsoft originally hired 25,000 Nokia employees, unfortunately, a series of layoffs over the past two years triggered the end of Microsoft's mobile subsidiary.

Mojang - 2014

In 2014, Microsoft made its first money move into the gaming world, as they bought Mojang, the Swedish firm behind the popular video game Minecraft, for $2.5bn (£1.5bn).

From the start of their agreement, Microsoft said the Mojang team would join its game studio, which is responsible for titles such as Halo, Forza and Fable.

Reaching millions of gamers, Microsoft aimed to maintain Minecraft across all its existing platforms, with a "commitment to nurture and grow it long into the future".

That is exactly what they did, as seven years on experts say this deal was one of their most successful acquisitions.

Sales of Minecraft are astonishing, selling around 100 million copies after Microsoft’s acquisition - accounting for almost $1.5B in revenue alone.

LinkedIn - 2016

Grasping the opportunity to ‘see how the world works’, in 2016 LinkedIn business-oriented social network site was bought by Microsoft for $26.2bn in cash - by far its biggest purchase ever.

The acquisition came after LinkedIn has struggled that year, as shares plunged 43per cent on the New York Stock Exchange.

However, this deal soon closed just six months after announcing the acquisition. In an internal memo, LinkedIn CEO Jeff Weiner went through the areas where the two companies would be working together, and how they will in other ways remain independent.

“​​This is a major milestone for the company, one that we believe will accelerate how we connect the world’s professionals to make them more productive and successful.”

GitHub - 2018

Two years later, Microsoft confirmed that it had acquired GitHub, the popular Git-based code sharing and collaboration service.

The price of the acquisition was $7.5 billion in Microsoft stock. GitHub raised $350 million and the company was valued at about $2 billion in 2015.

Microsoft installing a new CEO for GitHub is a clear sign that the company’s approach to integrating GitHub would be similar to how it is working with LinkedIn.

Microsoft acquired GitHub because it’s a perfect fit for its own ambitions to be the go-to platform for every developer, and every developer need, no matter the platform.

This acquisition was a success, as 12 months after the deal, the number of monthly active organizations using GitHub increased 70per cent.

ZeniMax Media - 2020

Following its success story with Mojang back in 2014, Microsoft decided to place itself further into the gaming industry, finalising a $7.5 billion deal to acquire ZeniMax Media, the parent company of Doom and Fallout studio Bethesda Softworks.

This was the next step in building an industry-leading first-party studios team, a commitment made to the Xbox community, according to Microsoft’s gaming chief Phil Spencer.

Ideally, Microsoft's goal is to give teams the best foundation for completing their greatest work and for Xbox to learn from Microsoft as they continue to build Xbox into an inclusive platform for all players.

Clearly, it is driving sales, as of December 2020, Microsoft's online gaming service had approximately 100 million monthly active users, which is up from under 40 million at the beginning of 2016.

Nuance Communications - 2021

On April 12th last year, Microsoft agreed to acquire Nuance Communications, a leader in speech-to-text software, for $19.7 billion- representing the latest step in Microsoft’s industry-specific cloud strategy.

Microsoft’s goal here increasing its presence in the healthcare vertical, a place where Nuance has done well in recent years.

Whilst Microsoft already has a number of speech recognition and chatbot products of its own, including desktop speech to text services in Windows and on Azure, it decided to take a chance on buying a market leader and go deeper into the healthcare vertical.

Whilst huge companies like Microsoft are keeping up with emerging technologies within different sectors, it seems Microsoft recognised this at the start of 2021, with 20per cent of patient interactions being digital, it was then predicted to increase to 35per cent by the end of 2021.

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