SAN FRANCISCO — Microsoft announced Monday that it will purchase San Francisco enterprise social-networking company Yammer for $1.2 billion in cash, confirming reports that began swirling around the companies two weeks ago.
Yammer is a 4-year-old company that offers businesses private social networks to foster communication and interaction among employees; it has attracted 5 million corporate users, Microsoft said Monday, including 85 percent of the Fortune 500 list of the top-earning American companies.
The expensive acquisition will add a cloud-based social-networking component to Microsoft’s popular business-software offerings.
“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” Microsoft chief executive Steve Ballmer said in Monday’s news release. “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”
Yammer was founded in 2008 by David Sacks, a PayPal co-founder. Sacks will continue to lead Yammer as it acts as a stand-alone service and company while joining the Microsoft Office division.
“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.”
Yammer’s focus on building internal social networks for businesses makes it similar to Palo Alto, Calif.-based Jive Software, which went public last year. Enterprise software has been a hot acquisition market for more than a year, as larger software companies seek to catch up in a market that businesses are examining for its ability to keep workers engaged and communicative. Yammer was one of the first such companies to establish a “freemium” model, with which it offers free services but charges businesses for premium controls such as security tools.
