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Microsoft offers to buy Yahoo! for £22.4bn

Microsoft offers to buy Yahoo! for £22.4bn

Microsoft has offered to buy Yahoo! for a massive $44.6 billion (£22.4 billion).

Microsoft has said today that it has formally offered to buy Yahoo! for a whopping $44.6 billion (£22.4 billion) in cash and stock. If the deal goes through, it would be the biggest Internet deal since the Time Warner-AOL merger.

"This proposal represents a compelling value realization event for your shareholders," said Steve Ballmer, Microsoft's chief executive, in a letter sent to Yahoo's board on Thursday.

The offer doesn't come as much of a surprise, given the rumours that have been circulating since May 2006, even though when the rumours resurfaced a year later, Microsoft was quick to quash them.

In the last year, Yahoo! has really struggled in an online market largely dominated by Google and during that period its share price dropping almost 32 percent. Microsoft has also been struggling to put the fight to Google, so it seemed increasingly likely that the two might team up to create the Internet giant's most formidable competitor to date.

The European Commission, the watchdog that is currently investigating Microsoft on antitrust charges relating to various technologies and products the company ties into Windows, refused to comment on the move.

"We have no comment," said Jonathan Todd, a spokesman for EU Competition Commissioner Neelie Kroes. Regardless, with a deal of this magnitude, there's no question that it would require European Commission clearance before it went ahead.

Just last night, Terry Semel, non-executive chairman of Yahoo! stepped down from the board of directors - he will be replaced by Roy Bostock. "Terry Semel has been a great partner and true friend, and has played a key role in helping to grow Yahoo!'s business - and industry-leading audience - over the past seven years," said Yang. "He also has been a tremendously valuable resource in recent months, as our new management team developed and began to execute our strategic growth plans. On behalf of the entire Board, I want to thank Terry for his many contributions to Yahoo! over the years - and for helping to lay a firm foundation for future success and improved financial performance."

Update 14:00 GMT
Yahoo! has just acknowledged the receipt of the offer from Microsoft in a statement that says "[Yahoo!'s] Board of Directors will evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders."

What do you think about the offer? Do you think it'll go through? Speculate away in the forums!

25 Comments

Discuss in the forums Reply
naokaji 1st February 2008, 13:48 Quote
22£ billions for a advertising plattform and a inferior unused search engine?

what idiot at ms thought yahoo would be worth that much?

the news they publish are copy pastes from reuters and other media agencies (just like the stuff on any news website / newspaper / tv), the search engine, anyone ever used it? no. sure, there is some advertiment income from the add's that are plastered all over, but i dont think that makes it worth more than one Quid.
Mankz 1st February 2008, 13:55 Quote
Can I have 22.4 Billion please?

Could be a good move. The two nearest competitiors to Google teaming up to take it on? Should be some interesting results!
AlexB 1st February 2008, 13:56 Quote
Unused? Holy wrongness batman. Yahoo is massive.
naokaji 1st February 2008, 14:01 Quote
Quote:
Originally Posted by AlexB
Unused? Holy wrongness batman. Yahoo is massive.

yahoo is used for the free email function which has plenty of ad's that generate income, but what else is used?

the search function has how much market share compared to google? prolly less than linux compared to windows.
ToMMo 1st February 2008, 14:06 Quote
I wouldn't call about 20% of all net searches 'not used'. Yea ok so they are declining massively compared to Google's 50% or so share. Combine MS and Yahoo and they still don't beat Google afaik so I'm not sure if the competition commission will decline, if anything they need to combine to take on the might of Google.
Still, £22.4bn is just a crazy amount of money that I just can't quantify.
Tim S 1st February 2008, 14:08 Quote
The amount puts AMD's £2.8 billion ATI buyout in a bit of a hole in comparison
samkiller42 1st February 2008, 14:16 Quote
I thought Yahoo was part of BT (British Telecom)
Thats quiet a lot of money, obviously Windows is selling well enough for MS to warrant a large purchase, i was hoping though that MS would by Switzerland (Zero Punctuation Halo 3 Review heh) haha

Sam
Flibblebot 1st February 2008, 14:24 Quote
Quote:
Originally Posted by samkiller42
I thought Yahoo was part of BT (British Telecom)
BT & Yahoo have a partnership with regards to broadband offerings, but they're not owned by BT.
Quote:
Thats quiet a lot of money, obviously Windows is selling well enough for MS to warrant a large purchase, i was hoping though that MS would by Switzerland (Zero Punctuation Halo 3 Review heh) haha

Sam
Apparently the price MS is offering ($31 per share) is a whopping 62% premium on Yahoo's Jan31 closing price. Looks like Microsoft is serious about this...
Firehed 1st February 2008, 15:12 Quote
Quote:
Originally Posted by naokaji
yahoo is used for the free email function which has plenty of ad's that generate income, but what else is used?

the search function has how much market share compared to google? prolly less than linux compared to windows.
I know tons of people that use the personalized home pages actually. Far more than use google.com/ig from what I've seen. For whatever reason, my dad goes to MSN all the time - and not by accident, as he uses Safari. I really just live in Google Reader now as the only non-feed stuff I have on my Google home page is on my iPhone. I think the search market is totally owned by Google, but for no-search-required, in-your-face content, both MSN and Y! dominate Google. Probably for the same reason in both cases - Google goes for clean and relevant to keep you coming back, while MSN and Yahoo throw as much on the page as possible in hopes they can keep you on their domain for as long as possible. Both are valid approaches as far as revenue streams go, but target the market very differently.
DXR_13KE 1st February 2008, 15:44 Quote
my friends says:

"MS is an amoeba" :D
AlexB 1st February 2008, 15:49 Quote
Not only searches, but Yahoo owns:

Delicious
Flickr
etc.
perplekks45 1st February 2008, 16:30 Quote
Not to mention the massive user base standing behind Yahoo! ever since...

But it's wort around 1/3 of what Google is worth? Errr... somebody else smells that internet hype again that already blew up once a few years ago? They're just going insane about whatever is on the internet nowadays IMHO.
completemadness 1st February 2008, 18:07 Quote
Noooooo :(

Sigh, i dont want to change email providers :(
wolff000 1st February 2008, 19:17 Quote
Quote:
Originally Posted by AlexB
Not only searches, but Yahoo owns:

Delicious
Flickr
etc.

you hit the nail on the head. When people read this they don't think of all the other sites that fall under the yahoo umbrella. i agree this is kinda high but not completely insane considering the user base yahoo has when you include all the sites they own.
ssj12 1st February 2008, 20:33 Quote
Sony uses Flickr for the PS Blog content... if this goes through it looks like Sony will be switching blogs.

Yahoo doesnt own wordpress do they?
Trefarm 1st February 2008, 21:34 Quote
Earlier in a MS boardroom... "Damn that Google's doing alright we should get a piece of that action <rummages in back pocket> yeah this should do £22.400.000.000 offer them that!"

Can you really go wrong when you've the money to buy pretty much anything you want?

Some countries would like a GDP that high!
Bionic-Blob 2nd February 2008, 09:22 Quote
Quote:
Originally Posted by AlexB
Not only searches, but Yahoo owns:

Delicious
Flickr
etc.

hah, i don't even know what those are o_o
Sebbo 2nd February 2008, 09:42 Quote
once this goes through, does it mean we can refer to them as Yacrosoft? ¥$ for short? :p
looks like microsoft might finally get a piece of the asian action, i know Yahoo is quite big in Japan and China (no penis jokes please )
Tulatin 2nd February 2008, 13:27 Quote
Yahoo whores their partnerships like no tomorrow. They're with Rogers here.

Still, though. "In the best interest of the shareholders?" being a part of Microsoft makes it hard to lose.
Tulatin 2nd February 2008, 13:31 Quote
Quote:
Originally Posted by Trefarm
Earlier in a MS boardroom... "Damn that Google's doing alright we should get a piece of that action <rummages in back pocket> yeah this should do £22.400.000.000 offer them that!"

Can you really go wrong when you've the money to buy pretty much anything you want?

Some countries would like a GDP that high!

I'm pretty sure that by this point, Microsoft's bank account reads as $/£ ∞
MrWillyWonka 2nd February 2008, 13:49 Quote
With that money Microsoft can buy the entire island of Malta 3 times over!

According to Wikipedia Microsoft made $14.06 billion profit in 2007 so this may be almost 2 years worth of profit to buy Yahoo. Anybody have any figures on how much Microsoft has in their bank?
kenco_uk 2nd February 2008, 17:18 Quote
At a rough guess, I would say: a lot.
RTT 3rd February 2008, 10:56 Quote
typing www.yahoo.com is like going back in time... 1998?
boggsi 3rd February 2008, 13:30 Quote
Quote:
Originally Posted by RTT
typing www.yahoo.com is like going back in time... 1998?

lol! too true.

I'm actually a little scared by this, feels like the internet is getting smaller! Also a little bit worrying, its major companies like Microsoft and Google that keep the internet going, is the town really big enough for both to justify throwing in such phenomenal sums of money? I'm aware Microsoft's main revenue streams aren't internet based, but thats my point, what if they turn tail when this goes horribly wrong and they have to write $6bn in value? (ala 900m write down on ebays purchase of skype) what if the internet as we know it collaspses and it becomes googlenet and microexchange? No fun here ladies and gentleman, get your things and keep moving.
widmod 3rd February 2008, 22:35 Quote
good to see some (or should I say a?) competitors to Google but Microsoft?
"press start to launch the search"
or various error messages would put me of

yahoo please team up with the linux community!
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