Confirmed: Microsoft bought Yammer for $1.2B

The Yammer team will join the Microsoft Office division, still to report to CEO David Sacks

Microsoft just announced it has has official acquired enterprise social networking company Yammer for a staggering $1.2 billion in cash. That is equates to roughly $500 million per year in existence.

The announcement comes after weeks of speculation that the buy was happening and that price tag would be in excess of $1 billion. According to Microsoft, the Yammer team will be join the Microsoft Office division while continuing to report to Yammer’s CEO and co-founder David Sacks.

Sacks is the former chief operating officer at PayPal and helped attract some serious investments for the young startup.

Back in February, Yammer raised $85 million at a valuation of more than $600 million and interest in the company as an inter-company communication and collaboration tool has been high for a while.

“When we started Yammer four years ago, we set out to do something big,” Sacks said in a statement today. “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.”

Since its inception in 2008, Yammer has raised around $142 million from VCs such as DFJ Growth, SOcial+Capital, Meritech Capital Partners, Capricorn Investment Group LLC, the investment arm of Jeff Skoll, Khosla Ventures, Crunchfund, Charles River Ventures, Emergence Capital, Founders Fund and U.S. Venture Partners.

That last $85 million round was put toward rapid expansion in an environment that was ramping up -- as Salesforce launched Chatter and Jive Software went public.

Social enterprise efforts have been big business lately. While in a different arm of the social experience, the purchases of Buddy Media by Salesforce for $689 million and the Oracle purchase of Vitrue for around $300 million are heating up the desire for businesses to buy social tools.

Adding Yammer could definitely help Microsoft provide its software customers with social-networking tools and beef-up the suite of products it offers corporate customers. 

Yammer is used by more than 200,000 companies, including Ebay and Ford Motor. Yammer is also used by roughly 85% of the Fortune 500.

Since Yammer is an enterprise social network provider (allowing employees to collaborate across departments, countries, content and applications) it could fold in well with Microsoft's Lync as well as bring together Lync and SharePoint.

Earlier this year, Yammer integrated its services with Microsoft Dynamics, offering Universal Search across enterprise applications and devices.

“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” said Steve Ballmer, CEO, Microsoft, in a statement. “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”