Microsoft bids 44.6 billion for Yahoo
February 01, 2008
Microsoft offered to buy Yahoo Inc. for
44.6 billion in cash and stock, a deal that could strongly influence
the Internet search market. The deal would pay Yahoo's shareholders $
31 a share which represents a 62% premium over Yahoo's closing stock
price on Thursday.
Yahoo said in a news release that its
board would evaluate Microsoft proposal “carefully and promptly”.
Microsoft planned to work closely with Yahoo's board as they
evaluate the offer.
Despite of their heavy investments in
online services, Yahoo and Microsoft have dropped behind Google.
Google's participation in the search market and online advertising
business has continued to expand.
“We believe our combination will
deliver superior value to our respective shareholder and better
choice and innovation to our customer and industry partners,” said
Steven A. Ballmer, Microsoft chief executive, in a statement.
In a letter to Yahoo's board, Microsoft
exposed that two companies previously discussed a possible merger, as
well as other ways to work together, in late 2006 and 2007. Yahoo
decided to cease the discussions because its board was confident in
company's “potential upside”.
“A year has gone by, and the
competitive situation has not improved,” said Mr Ballmer. He
believes that the only alternative now is the combination of
Microsoft and Yahoo that they are proposing.
On Tuesday, current nonexecutive
chairman and former Yahoo chief executive Terry Semel left Yahoo board.
He was one of the opponents to an earlier approach Microsoft made
Yahoo stated lower fourth-quarter
earnings and announced to dismiss 1,000 employees to reduce its expenses.
Yahoo is currently an important
supporter of open source projects. In September last year the company
acquired Zimbra, a direct competitor to Microsoft's Outlook and
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