Microsoft confirms $1.2bn deal for Yammer

Microsoft has confirmed that it will acquire social network Yammer in a $1.2bn cash transaction.

The company said that the deal, which is still pending approval from regulators, will add social networking features and support for the Office platform.

A billion-plus dollar deal between Microsoft and Yammer had been reported to be in the works earlier this month. Executives in Redmond have hailed the deal as an important addition to the company's collaboration and productivity offerings.

Yammer, which operates out of locations in London and San Francisco, develops social networking services focused on the business space. Microsoft said that when the transaction is completed, Yammer will be joining Microsoft's Office division.

The company plans to continue to offer the standalone Yammer social network as well as integrate the platform with Office, SharePoint and Skype.

"The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love," said Microsoft chief executive Steve Ballmer.

"Yammer adds a best-in-class enterprise social networking service to Microsoft's growing portfolio of complementary cloud services."

The social networking space has seen increasing consolidation in recent months, with deals including Salesforce's acquisition of Assistly and Yammer's purchase of OneDrum.

Rob Enderle, principal analyst with the Enderle Group, told V3 that while the deal will help Microsoft keep pace with competitors in adding and integrating social networking components, keeping Yammer in tact will be key.

"[Microsoft] needed a social aspect to their business product sets which were starting to look old and uninteresting," Enderle explained.

"This will help with that image but if they want to improve their products they will likely have to assure they retain some of the key people from this and their record retaining folks like this isn’t great."