Microsoft bids $44.6 billion for Yahoo
So the rumors were indeed correct. Today Microsoft officially proposed acquisition of Yahoo! for $31 per share — thats $44.6 billion for a company that is currently valued at $25.63 billion, a premium of 57.46%. The software giant said that the “combined entity will create a more competitive company, providing superior value to shareholders, better choice and innovation for customers and partners.” Microsoft believes that the combined entity will be much more efficient and will help save at least $1 billion annually. MS plans to buy Yahoo in a mix of cash and stock; its proposal would allow the Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo! shareholders consisting of one-half cash and one-half Microsoft common stock.
Till date both have failed to challenge Google in the lucrative search world, so if the takeover goes through then both company will benefit from each others’ capabilities to fight Google for online dominance. The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. So together if they can develop a better product than Google, then I am sure they can change the table.
“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,” said Steve Ballmer, chief executive officer of Microsoft. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”
“Our lives, our businesses, and even our society have been progressively transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure,” said Ray Ozzie, chief software architect at Microsoft. “The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own.”
[Press Release]
