DWRE Demandware, Inc. (delisted)

Salesforce.com Inc. lost out on its bid for LinkedIn Corp. to Microsoft Corp., which acquired the professional social network site for $26.2 billion on Monday, according to a person familiar with the matter.

Salesforce.com's offer price isn't known, but Brent Thill, an analyst at UBS Group, said purchasing LinkedIn would have been a stretch for the company, which makes web-based software for salespeople. Microsoft's purchase price is nearly half of Salesforce.com's $55.9 billion market capitalization.

"There are few deals in tech where the acquired company is 50% of the market cap," Mr. Thill said.

Microsoft agreed to pay cash for LinkedIn. The software giant held almost $106 billion in cash and short-term investments as of March 31 Salesforce.com, by comparison, reported $2 billion in cash and short-term investments as of April 30.

The rival bid was reported earlier by Bloomberg and Recode.

Salesforce.com's attempt to make such a large purchase suggests the high value of the professional social network to its business in web-based sales tools. The profiles of LinkedIn's 434 million members hold clues to corporate organizational structure, such as who manages which budgets, that could help salespeople find potential customers. And its record of interpersonal relationships could help salespeople contact prospects and gather information that could facilitate deals.

Salesforce.com will face increased competition from the combined Microsoft and LinkedIn in the $26.3 billion market for software for what is known as customer relationship management, analysts said. Salesforce.com leads the market with a 19.7% share compared with Microsoft's 4.3%, according to the market research firm Gartner Inc.

On a conference call with investors on Monday, Microsoft CEO Satya Nadella talked about the benefit of using LinkedIn's data as training information for computer programs that detect patterns and learn to spot them in new data.

Salesforce.com lately has pushed aggressively into this field, known as machine learning. The company in February it acquired PredictionIO, which makes software for building machine learning apps. Last year it bought MinHash and Tempo AI, two further machine-learning companies. In 2014, it bought RelateIQ, which also specializes in the field.

Salesforce.com struck a deal to acquire Demandware, a maker of e-commerce software, on May 28 in a $2.8 billion cash transaction. The deal was announced on June 1.

Write to Rachael King at rachael.king@wsj.com

(END) Dow Jones Newswires

June 16, 2016 23:55 ET (03:55 GMT)

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