Microsoft Offers $44.6B for Yahoo
Deal Aims to Counter Google's Internet Dominance
By Todd Spangler -- Multichannel News, 1/31/2008 9:31:00 PM MT
Microsoft floated a gargantuan offer of $44.6 billion in cash and stock for Yahoo, a deal that seeks to counter Google's dominance in online advertising.
Under the terms of the proposal, announced Friday, Microsoft would acquire all the outstanding shares of Yahoo common stock for $31 per share, consisting of half cash and half Microsoft stock. On Thursday, Yahoo closed at $19.18, so the Microsoft offer was a 62% premium price.
Yahoo called the bid an unsolicited offer and said its board would “evaluate this proposal carefully and promptly in the context of Yahoo!’s strategic plans and pursue the best course of action to maximize long-term value for shareholders.”
"We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," Microsoft CEO Steve Ballmer said in a statement. "We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."
In its announcement, Microsoft noted that the $40 billion online advertising market is "increasingly dominated by one player" today -- a clear reference to Google, which acquired
last year.
Microsoft said that together with Yahoo, it could save $1 billion annually in four areas: larger audience "critical mass" and "increased value for advertisers"; combined engineering talent; operational efficiencies through elimination of redundant cost; and the ability to "innovate in emerging user experiences," such as video and mobile content.
Microsoft said it intends to offer significant retention packages to Yahoo engineers, executives and other employees.
A deal would require the approval of Yahoo's board, as well as regulatory approvals. Microsoft said it hopes to complete the acquisition in the second half of calendar year 2008.
