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Microsoft Corp. offered to buy search engine operator Yahoo Inc. for $44.6 billion in cash and stock in a move to boost its competitive edge in the online services market.
Microsoft Proposes Acquisition of Yahoo! for $31 per Share [biz.yahoo.com]
REDMOND, Wash., Feb. 1 /PRNewswire-FirstCall/ -- Microsoft Corp. (Nasdaq: MSFT - News) today announced that it has made a proposal to the Yahoo! Inc. (Nasdaq: YHOO - News) Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion.
From Fortune's Daily Briefing [dailybriefing.blogs.fortune.cnn.com]
Microsoft’s letter to Yahoo further indicates that a year ago, Microsoft approached Yahoo’s board but was told that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” Given the plunge in Yahoo stock and the prospect of a damaging recession this year, if now isn’t the right time, it’s hard to imagine what is.
[edited by: Marcia at 12:02 pm (utc) on Feb. 1, 2008]
It's a hostile bid?
Even if they go ahead with the deal, its expected to complete in second half of 2008. Google still has at least 1 year time (many more years if you consider the quality of their search index and the number of tools and utilities they have up their sleeve).
I would be happy if Microsoft takes over Yahoo. Whether it will help Microsoft get more market share in Search Industry is something only time will tell.
Picked up by CNN (TV international) now from their headlines - "internet advertising set to double over the next 3 years to $80 billion". Justification for Microsoft's move? - on the cusp of a recession this takeover has got to be good news for the internet sector in general.
The offer, contained in a letter to Yahoo's board, represents a 62% premium above Yahoo's closing share price on the Nasdaq on Thursday.
Microsoft will host an analyst/investor conference call at 8:30 a.m. Eastern Time/5:30 a.m. Pacific Time to discuss today's announcement.
[edited by: Marcia at 12:55 pm (utc) on Feb. 1, 2008]
No, the problem is not combining the search engines - given Google's dominant position that is not a problem. The problem is all the markets where both MS and Yahoo are strong: IM and Webmail (not as much of a problem because network effects are limited) for a start.
Also, remember what MS did with Hotmail and Opera? What if they did something similar with the whole of Yahoo?
Regulators might impose conditions (i.e. make MS sell some bits of Yahoo), but that might not be what MS wants.
I can imagine Yahoo shareholders going for it, but I do not think regulators will like it, nor is it necessarily good for the rest of us.
As for knocking Google off their throne. I do not think that any of their current rivals will do it. It will be some little startup with really fresh thinking.
I really, really, really hope that MSN search is kept. Freaking Yahoo has me banned since the Inktomi days, some 10 years ago.
[edited by: walkman at 1:42 pm (utc) on Feb. 1, 2008]
Of course the problem is that changing and merging the sites is going to be difficult: the usual problem with huge mergers, but all the worse for being a technology business.
Consumers will have fewer choices and only be able to choose from the advertisers that can afford the increase in price. Consumers will not get the best bang for their buck.
I'm extremely nervous about the buyout. Anyone else having these feelings?
What does yahoo have, that Microsoft doesn't?
The names and addresses of over 400 million internet users
Most of those users are running Windows, so Microsoft already "knows" them. I don't know though, is almost $90 per user [google.com] the going rate?
$44.6B is the value of the brand
Maybe in 1999/2000, but today? I think $44.6B is the cost of destroying any possibility of a GOOG/YHOO merger. It seems a desperate move by Microsoft to play catch up with Google. In five years will this have made any difference if Microsoft still can't launch a quality search product?
Plus it takes time to absorb a company... At this point even a six month hiatus while Yahoo & Microsoft figure out how to organize is going to be six months that Google launches even further ahead.