Feeds

Microsoft! bids! $44.6bn! for! Yahoo!

F*ck! me!

The next step in data security

Update 3 Microsoft has made a $44.6bn takeover bid for Yahoo!.

Microsoft is offering Yahoo! shareholders a mix of cash and stock under the unsolicited offer.

The $31 per share offer represents a massive 62 per cent premium on Yahoo!'s closing price yesterday. Yahoo!'s board of directors promised to look at the offer "carefully and promptly".

In his offer letter to the Yahoo! board yesterday, Microsoft CEO Steve Ballmer wrote: "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."

This will be partly achieved by "$1bn in annual synergy for the combined entity" Microsoft says, partly by scale, partly through combining engineering talent and cutting out redundant costs.

If the deal goes ahead it is likely to come under serious regulatory scrutiny, and Microsoft seems ready to plead Google's web ascendancy in mitigation.

"Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners," Redmond's press statement said today. Warning regulators that "if we don't buy it, then Google will" is an interesting legal strategy, but is unlikely to win much support from competition regulators.

Ballmer's accompanying letter refers to a previous takeover offer made privately, from Microsoft in February 2007 which Yahoo!'s directors rejected. The reason given was that Yahoo! was confident in its ability to turn itself around.

Ballmer dryly notes: "A year has gone by, and the competitive situation has not improved." You can read it in full here.

When Microsoft last offered to buy the company, its shares were around the $30 mark. Since then they have been on the slide, despite a few rallies where they nudged $34.

Assuming that Microsoft offered a similarly generous bid premium last year the price then would have been well over $50bn.

But Yahoo!'s board of directors rejected that offer and instead bet the farm on Project Panama - Yahoo!'s delayed platform for distributing online ads.

By referring to this in the public letter Microsoft is making the latest proposed takeover hostile - the Yahoo! board is legally bound to do the best deal for their shareholders so it will be extremely difficult to reject a fully-priced takeover bid which is getting smaller by the year.

Much of the choicest bits of Yahoo! were bought in from outside rather than developed in-house. The company has been pretty busy in the last six months buying up ad exchange Right Media, mobile ad firm Actionality, sports site Rivals.com and Zimbra, the collaboration and email developer.

Back in 2005 Yahoo bought Flickr - the photo-sharing site which has gone from strength to strength and led to the closure of Yahoo's own picture service.

Microsoft’s previous biggest acquisition came last May when it bought online advertising company aQantive for $6bn.

On the face of it, the logistics of a merger are nightmarish, particularly given that Yahoo! has multiple integration projects of its own on the go. Add to that the certainty that the acquisition will wade through the regulatory process for months at the very least, and it seems that Google will have plenty of time to get its response ready, even if the deal does go ahead.

But given Yahoo!'s recent performance - with both profits and share price on the slide - it seems a fair bet that plenty of shareholders will be tempted by Microsoft's offer.®

Security for virtualized datacentres

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Why Oracle CEO Larry Ellison had to go ... Except he hasn't
Silicon Valley's veteran seadog in piratical Putin impression
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.