Microsoft Offer For Yahoo

Software giant Microsoft has today declared an interest in acquiring rival Yahoo through the form of a formal offer, addressed to the Yahoo board of directors at a value of $44.6 billion, through a combination of cash and equity.

The surprising move, which values the company at 62% beyond market value, is said to be designed to help close the gap on Google, who continue to be some way in front in the race to dominate the search engine market. The move follows slow results for Yahoo over the last quarter, and is awaiting acceptance by the Yahoo board before being offered before the shareholders.

Whilst Yahoo is considered more of a player in the search market than Microsoft at present, the deal would see the company saved in light of its recent poor performance and the news yesterday that it would require a further $300 million to revive its fortunes with the current market slowdown.

The move has however been seen as unexpected by market analysts, particularly given the closed nature of the market. If the deal were to be accepted, the consideration would run into both cash and shares, although investigations from US and EU competition authorities would also likely feature before the completion of any deal.

However many in the market have been critical of the deal, which it is suggested will see Microsoft paying over the odds for a declining business. Yahoo, formerly a leader in the internet search market, has been on the downward spiral for a number of years in correlation to the rise of Google, which has proven to have a highly successful formula and looks set to continue to dominate despite the current market climate which tends to be adverse to advertising and marketing spend.

“I personally don’t see how the synergies of Microsoft-Yahoo is going to take on Google,” said analysts Tim Smalls from Execution LLC.

Story link: Microsoft Offer For Yahoo