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Update: Microsoft has announced that it has signed a defin­i­tive agree­ment to acquire Yam­mer for $1.2 bil­lion in cash. With this acqui­si­tion, Yam­mer team will join the Microsoft Office Divi­sion, cur­rently headed by divi­sion Pres­i­dent Kurt Del­Bene, while the team will con­tinue to report to cur­rent Yam­mer CEO, David Sacks.

The com­pany also stated that Yam­mer now has 5 mil­lion cor­po­rate users adding 250,000 users every month, which includes employ­ees from 85% of the For­tune 500 com­pa­nies. Yam­mer CEO stated that Microsoft will con­tinue to invest in devel­op­ing Yammer’s stand­alone prod­uct and over time, users can expect inte­gra­tions to Microsoft Share­Point, Office 365, Dynam­ics and Skype. He also added that Yammer’s exper­tise will “help shape the com­mu­ni­ca­tion and col­lab­o­ra­tion expe­ri­ences in Office 365″.

Ear­lier (June 15): Microsoft is all set to buy the enter­prise social net­work­ing ser­vice Yam­mer for about $1.2 bil­lion, reports The Wall Street Jour­nal cit­ing sources famil­iar with the devel­op­ment. This fol­lows sim­i­lar reports from Bloomberg and Busi­nessIn­sider which had pre­vi­ously reported sim­i­lar devel­op­ments cit­ing its own inde­pen­dent sources.

The details of the acqui­si­tion are still very sketchy yet. While WSJ stated it is not clear as to when the deal will be offi­cially announced, Bloomberg states that the deal may hap­pen as soon as today (June 15) fol­low­ing an exten­sive nego­ti­a­tion period while other media reports sug­gests that the deal could be announced in the upcom­ing Microsoft press con­fer­ence, sched­uled to hap­pen on the com­ing Mon­day (June 18).

Fur­ther, there is also a lot of con­fu­sion on the rumored acqui­si­tion price of Yam­mer at present. While WSJ pegs it at $1.2 bil­lion, Bloomberg pegs it at more than $1 bil­lion and TechCrunch sug­gests a price tag of $1.4 mil­lion. Expect­edly though, Microsoft and Yam­mer rep­re­sen­ta­tives have declined to com­ment on these developments.

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Launched in 2008, Yam­mer is a San Fran­cisco based com­pany started by Pay­pal Ex-COO David Sacks. The com­pany has raised around $142 mil­lion in fund­ing from a range of investors includ­ing DFJ Growth, Charles River Ven­tures Inc. Emer­gence Cap­i­tal Part­ners, Meritech Cap­i­tal Part­ners, Capri­corn Invest­ment Group LLC, Khosla Ven­tures and Crunch­fund, Social+Capital Part­ner­ship, Founders Fund and U.S. Ven­ture Part­ners. The com­pany claims to have over 200,000 cus­tomers across the world, includ­ing Shell, DHL, Super­valu and Razorfish.

The com­pany cur­rently offers a Facebook-like pri­vate social net­work­ing plat­form within enter­prises, allow­ing employ­ees to It cur­rently works on a freemium model, offer­ing a basic free plans and paid plans start­ing at $79 per group per month going up to $15 per user per month. The com­pany had claimed to have con­ver­sion rate of around 20% con­ver­sion rate of free to paid accounts in a recent Forbes report. The report had also stated that Yam­mer has about 4 mil­lion users, of which 800,000 were paid customers.

In April 2012, Yam­mer had acquired One­Drum, a Scotland-based startup that offers file shar­ing and col­lab­o­ra­tion solu­tions for businesses, to bring desk­top sync and real time col­lab­o­ra­tion for Microsoft office suite to its plat­form. The com­pany had also recently launched uni­ver­sal search, pre­mium groups, a new Office 365 inte­gra­tion, updated mobile apps and Yam­mer Embed for enterprises.

Yam­mer cur­rently com­petes with Jive, Salesforce.com’s Chat­ter, Convo (pre­vi­ously known as Con­vofy), Asana Inc, VMware’s Social­cast, Moxie Soft­ware and Atlassian’s HipChat and is avail­able in 150 coun­tries in 23 dif­fer­ent languages.

What Next? If this acqui­si­tion goes through, Microsoft may inte­grate Yammer’s plat­form into enter­prise prod­ucts like Share­Point and offer a pri­vate social net­work­ing plat­form for enter­prises with inte­gra­tion to its other prod­ucts like Lync, Office, and Skype. Inter­est­ingly, Yam­mer already pro­vides Share­point inte­gra­tion and had recently announced its inte­gra­tion to Microsoft Dynamics, featuring updates from the CRM solu­tion to appear as activ­ity sto­ries in the Yam­mer Ticker.

With Inputs from Aman Rai

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