7:01 PM Feb-1-2008
Microsoft Corp. Friday said offered to buy Yahoo Inc. for $44.6 billion, or $31 a share, in a mix of cash and stock.
The offer represents a 62% premium on the $19.18 closing price of Yahoo on Thursday.
The software giant said the deal would create a more efficient company with total annual synergies of $1 billion, driven by audience critical mass, increased value for advertisers and operational efficiencies.
Microsoft said it has already developed a plan to involve both companies' employees in the integration, and said it would offer significant retention packages to Yahoo engineers and key leaders.
Microsoft said it expects a deal to get regulatory approval and to be completed in the second half of 2008.
Microsoft noted that it is targeting the fast growing online advertising business, which the company estimates will double to $80 billion by 2010 from $40 billion in 2007.
By teaming up with Yahoo, Microsoft gains critical edge in a fast-growing market and positions itself to help lead the possible consolidation of a sector that is beginning to impact all forms of commerce.
"Our lives, our businesses, and even our society have been progressively transformed by the web, and Yahoo has played a pioneering role by building compelling, high-scale services and infrastructure,' said Ray Ozzie, chief software architect at Microsoft.
"The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own," Ozzie added.
In his letter to Yahoo, Microsoft's Ballmer confirmed that the company had previously made overture to the Internet giant, which spurned the offer on the basis that the timing wasn't right then.
Ballmer also indicated that Microsoft's purchase offer would help Yahoo counter the aggressive moves that have propelled Google to the top of the field.
"While online advertising growth continues, there are significant benefits of scale in advertising platform economies, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence," Microsoft said.
"Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition," Microsoft said. "Together, Microsoft and Yahoo can offer a credible alternative for consumers, advertisers and publishers."
US STOCKS-Futures gain as Microsoft aims to buy Yahoo | Microsoft offers to buy Yahoo for $44.6 bln | Microsoft targets Yahoo! with $44.6bn bid
Microsoft offers to buy Yahoo for $44.6 billion
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