microsoft makes 44.6 billon bid for yahoo

[LaurieJim]

Microsoft makes unsolicited bid for Yahoo
Software giant offers $44.6 billion in effort to challenge Google
Yahoo said it will carefully and promptly study Microsofts bid.
MSNBC staff and news service reports
updated 1 hour, 7 minutes ago
REDMOND, Wash. - Microsoft has pounced on slumping Internet icon Yahoo with an unsolicited takeover offer of $44.6 billion, seeking to join forces against Google in what would be the biggest Internet deal since the Time Warner-AOL merger in 2001.

The surprise offer of $31 per share, made late Thursday and announced Friday, seizes on Yahoos weakness while Microsoft tries to muscle up in a high-stakes battle with Google likely to define the technology landscape for years to come.

(Msnbc.com is a joint venture of Microsoft and NBC Universal.)
Yahoo repeatedly has rebuffed Microsoft's advances in the past but in a statement Friday the company said it will carefully and promptly study the bid. The Justice Department also said it would be interested in reviewing the antitrust implications of the offer, and analysts expect other enforcement agencies to follow suit.

With its profits steadily sliding, Yahoos stock slipped to a four-year low this week, and a new management team has been trying to steer a turnaround but sees more turbulence through 2008. Yahoo Chairman Terry Semel, who had rejected an earlier bid from Microsoft, resigned from the company's board Thursday.

Microsoft-Yahoo a good idea?
Feb. 1: Is Microsoft's plan to acquire Yahoo a good idea? A panel of experts discusses the issue.
CNBC


Yahoo co-founder Jerry Yang, still one of the company's biggest shareholders, took over as chief executive last year after Semel was forced to step aside. Former advertising executive Roy Bostock, who has been on Yahoo's board since 2003, was named chairman Thursday.

The announcement of the Microsoft bid lifted Yahoos share price by almost 50 percent in Friday trading, while Google fell almost 8 percent, dragged down by a fourth-quarter earnings report that missed Wall Street expectations.

In conference call Friday morning, Microsoft Chief Executive Steve Ballmer indicated he wont take no for an answer after Yahoo rebuffed takeover overtures a year ago.

This is a decision we have and I have thought long and hard about, Ballmer said. We are confident its the right path for Microsoft and Yahoo. Video

Will Microsoft get Yahoo?

To underscore its resolve, Microsoft is offering a 62 percent premium to Yahoos closing stock price Thursday. If the deal is consummated, it would be by far the largest acquisition in Microsofts history, eclipsing last years $6 billion purchase of online ad service aQuantive.

Jordan Rohan, an analyst with RBC Capital Markets, said there was no way Yahoo shareholders could turn down the offer.

"The company has been floundering, and this is a great way to save face," he told CNBC. "Management has no reasonable out here."

Microsoft publicly disclosed its cash-and-stock offer in hopes of rallying support from Yahoos shareholders, making it more difficult for Yahoos board to turn down the bid.

"It puts a lot of public pressure right at the point where Yahoos management seems vulnerable," Rohan said.

In a letter released Friday, Ballmer pointedly noted Yahoos financial performance has deteriorated since Microsoft was spurned a year ago. At that time, Ballmer said he was told Yahoo believed it was better off on its own.

 

[lots0]

For the good of all who use the 'Tubes', I hope hope Yahoo stays out of the grasp of M$N.

 

[dominique]

Not so sure I share that sentiment.

It is extremely unhealthy that google controls the internet in the fashion they do.

There needs to be some competition and some balance.

Alone, Yahoo and msn are both never going to be able to catch up to google. Even combined, they will have a really hard time.

I think some competition in the search field is sorely needed. Lately google shows all these "comparison shopping" places on top. All the unique and informative mom and pop places have fallen off the search results. I am not talking about this industry, I am talking about the many other categories.

One stroke by any google employee and a business can be in ruins, employees out of work, everything lost.

No one should have such power. We sorely need two or three or more strong competitiors in the search field.

 

[jetset]

This deal is making headlines all over the world, and rightly so - report I heard today was that Google holds a 70 percent market share against Yahoo's 15 percent.

At a 62 percent premium on the current share price, it's going to be hard for the Yahoo board to stem shareholder demand, the Yang shareholding notwithstanding.

In general I would agree that too great a market dominance is not a good thing - this offer will surely be focusing the minds of the Google guys right now!

 

[LaurieJim]

yahoo board rejects bid offer as too low

Yahoo board to reject Microsoft bid as too low
Decision to spurn $44 billion offer could spark bitter battle

updated 6:44 p.m. CT, Sat., Feb. 9, 2008
SAN FRANCISCO - Yahoo Inc.'s board will reject Microsoft Corp.'s $44.6 billion takeover bid after concluding the unsolicited offer undervalues the slumping Internet pioneer, a person familiar with the situation said.

The decision could provoke a showdown between two of the world's most prominent technology companies with Internet search leader Google Inc. looming in the background. Leery of Microsoft expanding its turf on the Internet, Google already has offered to help Yahoo avert a takeover and urged antitrust regulators to take a hard look at the proposed deal.

If the world's largest software maker wants Yahoo badly enough, Microsoft could try to override Yahoo's board by taking its offer originally valued at $31 per share directly to the shareholders. Pursuing that risky route probably will require Microsoft to attempt to oust Yahoo's current 10-member board.

Alternatively, Microsoft could sweeten its bid. Many analysts believe Microsoft is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock.

Yahoo's board reached the decision after exploring a wide variety of alternatives during the past week, according to the person who spoke to The Associated Press on Saturday. The person didn't want to be identified because the reasons for Yahoo's rebuff won't be officially spelled out until Monday morning.

Microsoft and Yahoo declined to comment Saturday on the decision, first reported by The Wall Street Journal on its Web site.

Yahoo's board concluded Microsoft's offer is inadequate even though the company couldn't find any other potential bidders willing to offer a higher price.

Without other suitors on the horizon, Yahoo has had little choice but to turn a cold shoulder toward Microsoft if the board hopes to fulfill its responsibility to fetch the highest price possible for the company, said technology investment banker Ken Marlin.

"You would expect Yahoo's board to reject Microsoft at first," Marlin said. "If they didn't, they would be accused of malfeasance."

But by spurning Microsoft, Yahoo risks further alienating shareholders already upset about management missteps that have led to five consecutive quarters of declining profits.

The downturn caused Yahoo's stock price to plummet by more than 40 percent, erasing about $20 billion in shareholder wealth, in the three months leading up to Microsoft's bid.

Seizing on an opportunity to expand its clout on the Internet, Microsoft dangled a takeover offer that was 62 percent above Yahoo's stock price of just $19.18 when the bid was announced Feb. 1. Yahoo shares ended the past week at $29.20.

Led by company co-founder and board member Jerry Yang, Yahoo now will be under intense pressure to lay out a strategy that will prevent its stock price from collapsing again. What's more, Yang and the rest of the management team must convince Wall Street that they can boost Yahoo's market value beyond Microsoft's offer.

Yahoo's shares traded at $31 as recently as November, but have eroded steadily amid concerns about the slowing economy and frustration with the slow pace of a turnaround that Yang promised last June when he replaced former movie studio mogul Terry Semel as Yahoo's chief executive officer.

This isn't the first time that Yahoo has spurned Microsoft. The Redmond, Washington-based company offered $40 per share to buy Yahoo a year ago only to be shooed away by Semel, according to a person familiar with the matter. The person didn't want to be identified because that bid was never made public.

Yahoo now may want that Microsoft to raise its price to at least $40 per share again. That would force Microsoft to raise its current offer by about $12 billion a high price that might alarm its own shareholders.

Microsoft's stock price already has slid 12 percent since the company announced its Yahoo bid, reflecting concerns about the deal bogging down amid potential management distractions, sagging employee morale and other headaches that frequently arise when two big companies are combined.

Microsoft believes Yahoo's brand, engineers, audience and services will provide the company with valuable weapons in its so far unsuccessful attempt to narrow Google's huge lead in the lucrative Internet search and advertising markets.

As it examined ways to thwart Microsoft, Yahoo considered an advertising partnership with Google an alliance long favored by analysts who believe it would boost the profits of both companies. It was unclear Saturday if Yahoo's plans for boosting its stock price include a Google partnership, which would probably face antitrust issues.

A Microsoft takeover of Yahoo would also be scrutinized by antitrust regulators in the United States and Europe. The antitrust uncertainties could be cited as one of the reasons that Yahoo's board decided to spurn Microsoft.