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Microsoft bids $44 billion for YAHOO

Fri, Feb 1, 2008

Computers & gadgets, Internet, News

There has been a lot of speculations in past about this deal.Today,MS bid a $44 in cash and stock,for the internet giant.Microsoft offered $31 a share, a 62% premium.

This deal,if it materializes,will help Microsoft get closer to the domination of Google in the search market.

This is from here:

Shares of Yahoo (YHOO, Fortune 500) shot up 50% at the start of trading Friday, while shares of Dow component Microsoft (MSFT, Fortune 500) tumbled about 5%.

Steve Ballmer, Microsoft’s chief executive, called the move the “next major milestone” for the software giant.

“We are very, very confident this is the right path for Microsoft and for Yahoo,” he said.

Microsoft hopes to close the deal by the end of the year. Ballmer said that Microsoft has been in “off and on” talks with Yahoo for 18 months and said he called Yahoo CEO Jerry Yang Thursday night to tell him the bid was coming.

A Microsoft-Yahoo combination would create a powerful number two player in the online search business, which Google commands. The leading search engine reigns over 58.4% of the U.S. search market, while Yahoo has 22.9% and Microsoft’s share is just 9.8%, according to comScore, a research firm that tracks Internet traffic.

Microsoft made the bid early Friday. In a statement, the company said the offer allows Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the software giant’s offer consisting of one-half cash and one-half Microsoft common stock.

In a statement, Yahoo acknowledged receipt of the offer and said its board would evaluate the proposal “carefully and promptly.”

Both Microsoft and Yahoo have fallen far behind rival Google (GOOG, Fortune 500) in the lucrative field of Internet search. Yahoo’s earnings and share of the online search market have badly trailed Google.

In a letter it sent to Yahoo’s board of directors, Microsoft disclosed it had explored a Microsoft-Yahoo deal a year earlier, only to be rebuffed by Yahoo, which said at that time it was confident of the “potential upside” for Yahoo from operational changes it planned.

“A year has gone by, and the competitive situation has not improved,” said Ballmer.

On Thursday, former Yahoo CEO and current Chairman Terry Semel, who opposed an earlier approach Microsoft made last year, resigned from the Yahoo board.

Yahoo announced Tuesday it would lay off 1,000 employees by mid-February, citing what CEO Yang described as “headwinds” facing the company. It also reported lower fourth-quarter earnings that still beat Wall Street’s now modest expectations for the firm, but it gave a 2008 revenue forecast that disappointed analysts.

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1 Trackbacks For This Post

  1. Internet is saved, MS drops Yahoo bid | BT-G.com: The Everything Blog Says:

    [...] almost three months internet was threatened (MS bids $44 million for Yahoo) , i(we?) can breathe a sigh of relief now that Microsoft has dropped its plan of acquiring Yahoo. [...]