The hard fact that Google is expanding rapidly and commanding more than 60% of the onlne advertising arena (Google Adwords) has pushed Microsoft to make an official proposal to acquire Yahoo in a deal worth $44.6 billion in cash and stock, at a price of $31 per share, which represents a 62 percent premium for shareholders.
From Microsoft Press Release:
“Microsoft Corp. (NASDAQ:MSFT) today announced that it has made a proposal to the Yahoo! Inc. (NASDAQ:YHOO) 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. Microsoft’s 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. The offer represents a 62 percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008.”
Microsoft’s CEO, Steve Ballmer says:
“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. We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”
It’s not the first and it sounds more likely this time that both companies has a higher chance of coming together. In May 2007 when the rumors first surfaced, even the valuation was pretty close: 50 billion. And with Yahoo releasing their 4th quarter earning reports recently with a profit drop of 23%, Microsoft is more likely sitting on the driving seat. I’m really surprise but what is yahoo doing with yahoo panama=yahoo search marketing. It is still in beta and it never came close to taking over Google Adwords stonghold.
Update: Yahoo now has an official, if not very revealing, response to what they call an “unsolicited proposal from Microsoft.” The complete text of the response is as follows:
“Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today said that it has received an unsolicited proposal from Microsoft to acquire the Company. The Company said that its Board of Directors will 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.”