The software conglomerate Microsoft corporation plans to take over Y! yahoo for 44.6 billion USD which could end up as the biggest takeover by a software giant if it comes true. Microsoft corporation made its intention clears by announcing to the Board of Directors( yahoo Inc) that it has a proposal for offering per share consideration of $31 representing a total equity value of approximately $44.6 billion. This offer by Microsoft corporation represents a 62 percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008.
Steve Ballmer, CEO of Microsof, said that he had great respect for yahoo and their combination could offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.
Critics feel that Microsoft currently trails both Yahoo and Google in the lucrative and growing business of Web search and online advertising. The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. Microsoft is feeling increasing pressure to compete with Google, which plans to add value to its portfolio with a USD 3.1 billion buy of online advertising company DoubleClick. Earlier this week, Yahoo said it would buy 80 percent of advertising exchange Right Media for USD 680 million, increasing its stake in that company to full control. Microsoft wants to join hands with yahoo to stop the google onslaught. Microsoft recently invested 240 million USD for the control of a mere 1.6% stake in the social networking website Facebook.
We will have to wait and see if the Microsoft yahoo merger is fruitful for both the parties and will they be able to stop the Google juggernaut.
