Applying this same principle to the forthcoming acquisition of UPWK spells a potential sweet payday for investors. As of mid-March, the price of UPWK is about $20. If Microsoft is willing to pay the same premium it did for LinkedIn, UpWork could be purchased for about $100+ per share. Seeing as the share price of UPWK has never pushed above $25 per share, this would be a good return for investors, no matter what price they bought shares.
It isn’t as if Microsoft can’t afford this type of acquisition. UpWork is currently valued at about $2 billion. A purchase by Microsoft at a 50% premium would cost the company about $3 billion, which is peanuts for a firm valued at over $900 billion. Microsoft has over $150 billion secured in cash or short-term investments at its disposal with which it could purchase UpWork without skipping a beat.
|Company||Stock Price at the time of Acquisition||Premium Paid by Microsoft||Acquisition Stock Price|
*Estimated statistics based on current stock price and premium paid by Microsoft in the LinkedIn acquisition.
Jump on board before it’s too late
All signals point to a Microsoft-UpWork acquisition so much so that there are already talks of a deal in the works. As with many acquisition targets for tech giants, there is no telling how quickly a deal will be agreed upon by both parties. But one thing is certain, any investors wanting to capture the potential upside from this type of deal better hop on the UPWK train before it’s too late.