It's been an admittedly a dismal week for Yahoo! - just three days ago they announced 1,000 job cuts and a 23% drop in profit, and their former CEO Terry Semel resigned from the Board of Directors yesterday. So it may come as no surprise to hear that Microsoft Corp. has made an unsolicited offer to buy Yahoo! for around $44.6 billion. The offer values Yahoo! at $31 per share - a 62% premium on their closing price on Wall Street last night. Microsoft's statement indicated that shareholders could elect to receive cash or a fixed number of shares of Microsoft common stock.
This isn't the first time the company names have been connected. Microsoft and Yahoo! looked into ways of working together in late 2006 and 2007, and Microsoft proposed a takeover. Then Microsoft's advances were rejected. But recent events might make Yahoo! a little more welcoming.
Speaking about the proposed friendly takeover Steve Ballmer, Microsoft's chief executive said:
"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."
He suggested that, should Microsoft's bid be successful, they would be able to create a "more efficient" company and would aim to generate at least $1 billion in annual synergy for the combined entity.
A partnership between these still heavy-hitting but increasingly threatened companies could give them the best chance of reclaiming some market share from the increasingly ubiquitous Google. But for now we can only wait with baited breath to see if this history-making takeover takes off.
The full text of Steve Ballmer's letter to Yahoo! can be read on the Guardian website.
