Yammer CEO David Sacks

[credit provider=”Yammer”]

There’s a new billion-dollar company in the South of Market neighbourhood in San Francisco.Microsoft has officially acquired enterprise social network Yammer for $1.2 billion. Business Insider first reported the acquisition was in the works earlier this month.

Microsoft is acquiring the company of former PayPal COO David Sacks for $1.2 billion in cash.

Yammer’s employees will join Microsoft’s Office division and continue to report to Sacks.

Yammer has 5 million corporate users, the company said today.

Yammer’s Web-based software lets employees work together on projects and share information in an environment that looks more like Facebook than Microsoft Office.

The enterprise social network raised $85 million in February at a reported valuation of $500 million.

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Here’s the full release:

REDMOND, Wash. and SAN FRANCISCO, June 25, 2012 — Microsoft Corp. and Yammer Inc. today announced that they have entered into a definitive agreement under which Microsoft will acquire Yammer, a leading provider of enterprise social networks, for $1.2 billion in cash. Yammer will join the Microsoft Office Division, led by division President Kurt DelBene, and the team will continue to report to current CEO David Sacks.

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

Launched in 2008, Yammer now has more than 5 million corporate users, including employees at 85 per cent of the Fortune 500. The service allows employees to join a secure, private social network for free and then makes it easy for companies to convert a grassroots movement into companywide strategic initiative.

Yammer will continue to develop its standalone service and maintain its commitment to simplicity, innovation and cross-platform experiences. Moving forward, Microsoft plans to accelerate Yammer’s adoption alongside complementary offerings from Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype.

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

The acquisition is subject to customary closing conditions, including regulatory approval.