SAN FRANCISCO — LinkedIn Corp. may have had the upper hand in negotiating its $26.2 billion sale to Microsoft.
That’s at least one way to interpret a Bloomberg Law data analysis that found the language in the merger agreement appeared to be the work of Wilson Sonsini Goodrich & Rosati, the firm representing LinkedIn. That’s unusual, say analysts and deal lawyers, as LinkedIn is the target.
“It is unusual for a target public company to do the first draft,” said Morrison & Foerster partner Robert Townsend, “but it does happen.” He and other corporate lawyers said the caveats to the usual setup include speed, multiple potential buyers and whether a company has explored a sale in the recent past and has a draft ready to offer. But Townsend and others stressed that there’s no way to tell from the Bloomberg data how the negotiations really went. Bloomberg has created a database of public company merger agreements that allows it to see a sort of linguistic fingerprint left by the law firm doing the heavy lifting on the agreement.
Analysts ran the LinkedIn and Microsoft merger agreement through an algorithm and compared it to a database of hundreds of deals. The tool parses the text paragraph by paragraph, isolating individual provisions and finding deals with similar language. Terms in the LinkedIn agreement had a high degree of similarity with terms in past deals handled by Wilson Sonsini. The tool even found what could be called a template for the LinkedIn deal: API Technologies Corp.’s sale to J.F. Lehman & Co. for roughly $111 million. Wilson Sonsini worked on that deal, representing API.
For this deal, LinkedIn turned to a Wilson Sonsini team that included partners Martin Korman and Katharine Martin. Microsoft, for its largest-ever purchase, relied on a Simpson, Thacher & Bartlett team that included New York-based partners Alan Klein and Anthony Vernace.
The price tag has been attributed to the value of LinkedIn’s data. “The richness of LinkedIn’s data is absolutely the driver,” said LinkedIn’s founding chief technology officer Eric Ly in an interview with the San Francisco Business Times. “They’ve amassed over 400 million profiles, and what’s valuable is that it’s very high-quality data. It’s added by the users themselves; it hasn’t been scraped off the web; it’s accurate and up-to-date.” Ly no longer works for the company.
The data’s value, the reported interest from another buyer and the traces of Wilson Sonsini’s hand on the initial merger agreement all add up to potential leverage for LinkedIn. Korman declined to comment and Martin is on vacation and could not be reached. Klein and Vernace did not return messages seeking comment. There are many reasons why Wilson Sonsini might have put the terms together, said John Maloney, commercial product director for corporate and transactional at Bloomberg Law. It could mean Microsoft wanted to ensure there were no sticking points by letting its target drive the terms. Or “maybe it upped the likelihood of moving the terms quicker, getting to a signature quicker,” he said.
Corporate lawyers say it sometimes happens too when a seller is dealing with multiple suitors. According to a report by The Wall Street Journal, Salesforce.com Inc. also made a play for LinkedIn.
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