February 01 2008
Microsoft to buy Yahoo
Microsoft has launched a $44.6bn (£22.4bn) bid for Yahoo
Microsoft has sat around on the fence and watched Google becoming a bigger household name, and they’ve finally decided enough-is-enough. So in one single deal worth £22.4 billion they’ve made an audacious bid to create an online advertising challenger that has the IT know how and the reach to challenge the market leader Google.
Microsoft, is offering Yahoo shareholders $31 a share in a combination of cash and its own stock. The deal would rank as one of the largest dotcom takeovers since AOL and Time Warner merged at the height of the tech stock boom – but will hopefully be much more successful than that disastrous coupling.
"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," said Microsoft's chief executive, Steve Ballmer.
He added: "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," said Ballmer.
"The combined assets and strong services focus of these two companies will enable us to achieve scale economies while reaching R&D critical mass to deliver innovation breakthroughs," said Kevin Johnson, president of the platforms and services division of Microsoft.
Microsoft reckons it can cut costs across the combined business, leading to what it called 'synergies' of at least $1bn a year.
In a letter to Yahoo's board of directors, Ballmer claimed that it would also allow them to develop a single search index and single advertising platform - more powerful than either could build alone.
"Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own," Ballmer said.
So what do you think? Will this be a Google killer? I think it’s a foolhardy attempt and Microsoft would be better off investing the money in something new and innovative rather than just buying the competition. But that’s just my opinion What’s yours?
