Microsoft Corp agreed to buy LinkedIn Corp for , the companies said in a statement on Monday.
The offer of $196 per share represents a premium of 49.5 percent to LinkedIn's Friday closing price.
Microsoft announced the deal in a blog post on Monday morning.
"Today is a re-founding moment for LinkedIn," Reid Hoffman, chairman of LinkedIn's board, said in a statement.
Jeff Weiner will remain chief executive of LinkedIn, reporting to Microsoft CEO Satya Nadella. The deal is expected to close in 2016.
According to BBC, the software giant said that LinkedIn would retain its "distinct brand, culture and independence".
It is the biggest acquisition made by the software giant, which has made eight takeovers worth more than $1bn. Microsoft bought Skype in 2011 and Nokia in 2013.
"The LinkedIn team has grown a fantastic business centered on connecting the world's professionals," Satya Nadella said. "Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet."
This is Microsoft CEO Satya Nadella's first big acquisition since he took over the top job more than two years ago. Microsoft is positioning the combination as the "world's leading professional cloud" together with the "world's leading professional network."
More than 433 million people use LinkedIn worldwide to network, find jobs, and reconnect with old colleagues. Many of those LinkedIn users also pay for premium services to use the site.
The company has some 60% of all traffic on mobile, and - thanks to some amazing SEO - a massive 45 billion quarterly page views. It's also one of the biggest repositories of job listings, with some 7 million active listings currently.
Microsoft and LinkedIn released a video promoting the move.
By Sarakshi Rai
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