The deal is priced at $196 per share, and Microsoft (MSFT) said Jeff Weiner will remain chief executive of LinkedIn (LNKD), reporting to Microsoft chief executive Satya Nadella.

The deal was unanimously approved by both companies’ boards and is expected to close this calendar year subject to the approval of LinkedIn shareholders and regulators.

“Today is a re-founding moment for LinkedIn. I see incredible opportunity for our members and customers and look forward to supporting this new and combined business,” LinkedIn co-founder and chairman Reid Hoffman said in a statement. “I fully support this transaction and the Board’s decision to pursue it, and will vote my shares in accordance with their recommendation on it.”

Nadella, who is making a huge statement with this acquisition two and a half years into his tenure as Microsoft’s chief said that the two companies can “accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics.”

Office 365 is a bundle of Microsoft’s desktop productivity applications and email products delivered over the web. Dynamics is Microsoft’s line of business-focused accounting and financial services applications.

LinkedIn’s business orientation aligns with the fact that Microsoft—X-box and Bing aside—remains dedicated to business users. It also lacks a meaningful social network presence of the sort that Twitter (TWTR)and Facebook (FB) can claim and which Google tried to glom onto with Google +. In LinkedIn, Microsoft gets a social presence that fits nicely into its worldview.

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UBS analyst Brent Thill pointed out in a research note that the deal makes sense in that it extends Microsoft’s application layer which has been looking for growth and also ties in nicely with products such as the Delve organization analytics and data visualization tool, Office 365 and Power BI.

But there are some caveats, the biggest of which is Microsoft’s mixed record with big acquisitions as evidenced with Yammer, Skype and Nokia.

This will be Microsoft’s largest deal ever and, as Thill put it, the company has never done will with large M&A. He noted that both aQuantive and Nokia deals (both done in the pre-Nadella era) were “largely written off.” He also noted that LinkedIn revue growth has been “decelerating.”

This story will be updated.