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Microsoft Acquires Yammer for $1.2 Billion, Positions Itself as The Complete Enterprise Social Network

After weeks of rumors, Microsoft  announced it has purchased Yammer, the enterprise social network, for $1.2 billion in cash. The four-year old startup was founded by former PayPal COO David Sacks, and had raised a $85 million round in February, at a $500 million valuation. Yammer, which allows employees communicate and collaborate on projects in a private network that looks similar to Facebook (CE uses Yammer), has 5 million corporate users, including 85 percent of the Fortune 500. Yammer’s employees will join Microsoft’s Office division, where they will continue to report to Sacks.

If you include the Skype purchase, Microsoft may be attempting to build the perfect enterprise social network. With Office 365, a proven enterprise communication and collaboration service in Yammer, and the world’s most popular video video-chat service in Skype, Microsoft has positioned itself perfectly for companies looking for a complete collaboration network. Their biggest issue will be integration. Microsoft had issues integrating Skype into Windows Phone, so there’s no telling how long it will take them to get Skype and Yammer together, but if they pull it off, Microsoft is in prime position as the social enterprise leader.

Especiallly if the rumors of a RIM acquisition prove to be true.

Yammer CEO David Sacks Blog Post:

I am pleased to announce that Yammer has signed a definitive agreement to be acquired by Microsoft.    After the close of the deal, Microsoft will continue to invest in Yammer’s stand-alone service, and the team will remain under my direction within the Microsoft’s Office Division.

When Adam Pisoni and I started Yammer, we set out to do something big.  When most people thought social networking was for kids, we had a vision for how it could change the way we work.  Four years ago, we started paddling out to catch the wave that we’re riding today.

With the backing of Microsoft, our aim is to massively accelerate our vision to change the way work gets done with software that is built for the enterprise and loved by users.

As a Yammer customer, you will continue to get a secure, private social network—delivered with the same focus on simplicity, innovation, and cross-platform experiences.  Over time, you’ll see more and more connections to SharePoint, Office365, Dynamics and Skype.

Yammer’s expertise in empowering employees, driving voluntary adoption, and delivering rapid innovation in the cloud will not only continue to power our stand-alone service, but also help shape the communication and collaboration experiences in Office 365.

Microsoft Press Release:

REDMOND, Wash. and SAN FRANCISCO, June 25, 2012 — Microsoft Corp. and Yammer Inc. today announced that they have entered into a definitive agreement under which Microsoft will acquire Yammer, a leading provider of enterprise social networks, for $1.2 billion in cash. Yammer will join the Microsoft Office Division, led by division President Kurt DelBene, and the team will continue to report to current CEO David Sacks.

“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” said Steve Ballmer, CEO, Microsoft. “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”

Launched in 2008, Yammer now has more than 5 million corporate users, including employees at 85 percent of the Fortune 500. The service allows employees to join a secure, private social network for free and then makes it easy for companies to convert a grassroots movement into companywide strategic initiative.

Yammer will continue to develop its standalone service and maintain its commitment to simplicity, innovation and cross-platform experiences. Moving forward, Microsoft plans to accelerate Yammer’s adoption alongside complementary offerings from Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype.

“When we started Yammer four years ago, we set out to do something big,” Sacks said. “We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we’ll need to scale and innovate.”

The acquisition is subject to customary closing conditions, including regulatory approval.

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