Microsoft offers to buy Yahoo for US$45bil


  • Business
  • Saturday, 02 Feb 2008

NEW YORK: Microsoft Corp said yesterday it has offered to buy Yahoo Inc, the popular Web portal, for US$44.6bil in cash and stock, seeking to join forces against Google Inc in what would be the biggest Internet deal since the Time Warner-AOL merger. 

Microsoft offered to buy Yahoo for US$31 a share, a 62% premium over Yahoo's closing price on Nasdaq on Thursday. Yahoo shares jumped to US$30.75 in pre-market trading. 

Yahoo said the online advertising market was growing rapidly and expected to reach nearly US$80bil by 2010 from over US$40bil in 2007. Yahoo added it was “increasingly dominated by one player'', referring to Web search leader Google. 

“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,'' Microsoft chief executive Steve Ballmer said in a statement. 

Yahoo has been losing market share to Google and warned earlier this week that it faced “headwinds'' in 2008, forecasting revenue below Wall Street estimates. 

On Thursday, Yahoo disclosed that non-executive chairman Terry Semel was leaving the board, ending its formal ties with the former chief executive, who is credited with reviving the company and then losing touch. 

Paul Mendelsohn, chief investment strategist at Windham Financial Services, said a deal made sense. 

“Yahoo is having a really tough time competing against Google. Whether it's a good price, I can't see anybody else who is going to outbid Microsoft,'' Mendelsohn said. 

Microsoft said it had identified four areas that would generate at least US$1bil in annual synergies for the combined entity. – Reuters  

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