Microsoft Bids $44.6 Billion for Yahoo

http://www.nytimes.com/2008/02/01/business/01cnd-yahoo.html

February 1, 2008
Microsoft Bids $44.6 Billion for Yahoo
By MIGUEL HELFT

SAN FRANCISCO — Microsoft said Friday that it has made an offer to buy Yahoo for about $44.6 billion, or $31 a share, in a mix of cash and stock.

The offer represents a 62 percent premium over Yahoo’s closing stock price of $19.18 on Thursday.

If consummated, the deal would redraw the competitive landscape of the Internet consumer services business, where both Microsoft and Yahoo have struggled to compete with Google.

Microsoft said the combination of the two companies would create efficiencies that would save approximately $1 billion annually. The software giant also said that it has an integration plan to include employees of both companies and intends to offer incentives to retain Yahoo employees.

"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 Steven A. Ballmer, Microsoft’s chief executive, in a statement.

"We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners," he said.

Microsoft said it planned to work closely with Yahoo’s board of directors as they evaluate this, apparently, unsolicited offer.

Despite their heavy investments in online services, both Yahoo and Microsoft have watched Google extend its dominance over Internet search and the lucrative online advertising business that goes along with it.

In recent months, Yahoo has struggled to develop a plan to turn around the company under co-founder Jerry Yang, who was appointed chief executive amid growing shareholder dissatisfaction last summer.

Yahoo investors, however, remain skeptical. The company’s shares have slumped and before the bid were trading at levels not seen in more than three years.

Earlier this week, Yahoo said it would cut 1,000 jobs in an effort to refocus the company and reduce spending, and issued an outlook for 2008 that disappointed investors.

It is not clear how Yahoo’s board will react to Microsoft’s offer.

Microsoft said it believes the transaction could receive the necessary regulatory approvals by the second half of this year.