The social network’s shares soared by 49% on news of the acquisition, which is set to be completed by the end of the year.
Microsoft has signed a surprise deal to buy the professional social network LinkedIn for $26.2bn (£18.3bn) in cash.
In a statement, the tech company said LinkedIn would “retain its distinct brand, culture and independence” following the acquisition.
Microsoft is to pay $196 (£139) per share for the growing company – a 50% premium on the stock’s closing price last Friday.
LinkedIn, which boasts more than 430 million users worldwide, allows people to network with fellow professionals, upload their CVs and apply for jobs. Jeff Weiner will continue to head the social network, and will report to Microsoft’s chief executive Satya Nadella.
The acquisition comes four years after LinkedIn was hit by a major cyber attack – and last month a hacker caused alarm by claiming he had more than 100 million logins for sale. Shares in LinkedIn surged 47.8% on the news, while Microsoft’s share price fell 4.1%.