Microsoft snaps up business chat network Yammer for $1bn, say reports

Published Jun 15 2012, 12:53 BST  |  By Andrew Laughlin

Business networking site Yammer has reportedly agreed to sell itself to Microsoft in a deal valued at $1.2 billion (£771.5m), with the US software giant planning to integrate the service into its Office software.

Bloomberg initially reported that Microsoft was in talks to buy Yammer, but The Wall Street Journal says that it is unclear when the deal will be completed or announced.

Some reports have said that a statement from Microsoft will come later today (June 15).

Launched in 2008, Yammer is a social media service for businesses, which creates private communications networks within companies, working similarly to Jive and the Salesforce-owned Chatter.

Yammer also offers additional file-sharing tools and other services.

The startup is part of a group of internet companies that aim more at assisting business and productivity than helping people socialise.

Investors are certainly taking note, as Jive saw its share price rocket 50% after going public last December, while file-sharing service Dropbox is thought to have a private market valuation of $4bn.

Many of these firms provide competing services to Microsoft and the US software giant appears to have decided that Yammer is worth bringing into its operation.

Yammer has raised around $142m from venture capital networks to date, and its chief executive David O Sacks has previously said that the aim is to launch an initial public offering eventually.

Snapping up the firm before it lists on the stock market would be preferable for Microsoft, and mirror the strategy it adopted with the Skype acquisition last year.

Microsoft lavished $8.5bn on the internet telephony company, its biggest ever acquisition, but at the time Skype was filing documents with regulators about taking the company public.

Buying Yammer would inject more social features into Microsoft Office, a key pillar in Microsoft's product range and a massive money-spinner.

In the nine months to March 31, the Microsoft division making Microsoft Office posted revenue of $17.7 billion, up 6.4% year-on-year.

Office already offers the SharePoint product that has many similar features to Yammer, but few companies currently use SharePoint to power their internal communications.

Yammer has grown by offering its social networking software for free to companies, but then encouraging them to pay for upgrades. The startup claims to have four million corporate users, of which 20% pay for services.

Representatives for Microsoft and Yammer declined to comment on the speculation.