Microsoft said to be in discussions to buy Yammer network

San Francisco: Microsoft Corp. is in discussions to acquire Yammer Inc., operator of a social network for businesses, said two people familiar with the matter.

“Microsoft may pay more than $1 billion, and a deal may be reached as soon as Friday,” said one person, who declined to be identified because the negotiations are private.

Gaining closely held Yammer would help Microsoft, the world’s largest software maker, add social-networking tools to the suite of products it offers corporate customers. Large information-technology companies are snapping up nimbler startups, sometimes before they reach an initial public offering, spending $17.4 billion on enterprise software acquisitions in 2011, compared with $715.5 million in 2009, data compiled by Bloomberg show.

A deal for Yammer would follow other recent enterprise software purchases centered around social media. Salesforce.com Inc. gained social-marketing tools through its $745 million purchase of Buddy Media Inc. earlier this month, and Oracle Corp. recently bought two companies that analyze data on social- media sites—Vitrue Inc. and Collective Intellect Inc.

Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, declined to comment on a potential deal. Deanna McPherson, a spokeswoman for closely held Yammer, also declined to comment.

Venture funding

San Francisco-based Yammer was founded in 2008 by David Sacks, the former chief operating officer at PayPal Inc. It has raised more than $140 million in funding from venture firms, including Charles River Ventures Inc. and Emergence Capital Partners.

Yammer is used by more than 200,000 companies, including Ford Motor Co. and eBay Inc. It provides features for internal corporate use that are similar to those found on Facebook Inc.’s website. Yammer competes with Jive Software Inc., Chatter, run by Salesforce.com, and Asana Inc., Facebook co-founder Dustin Moskovitz’s company.

Jive, which had its initial public offering in December, gained 8.8% to $18.20 at 10:44am in New York. The stock had gained 4.6% this year through Wednesday.

Microsoft’s shares were little changed at $29.14 at 10:44am in New York. Through Wednesday, the stock had climbed 12% this year.

Dina Bass in Seattle, Ari Levy in San Francisco and Lisa Rapaport and Sarah Frier in New York contributed to the story.

feedback@livemint.com