Microsoft has for many years been buying up smaller companies, typically software vendors. But this one’s a big fish. In what would be one of the biggest internet buyout deals, Microsoft announced that it has made a proposal to the Yahoo board of directors for US$44.6 billion. Let’s see, that’s US$44,600,000,000. That’s a lot of zeros.
Why would Microsoft be interested in buying out Yahoo. Could it be that Yahoo has had more success in the search engine business over the years? That’s one very likely reason. Microsoft would surely like to get more market share in the very lucrative online advertising space.
Should this takeover take place, it will be interesting to see how the two companies overlapping products pan out over time. Both companies offer free email, web search, paid web advertising. Will both companies biggest competitor in those markets, Google, need to change their business model? Or will they simply continue leading the pack as they currently are?
Time will tell whether Yahoo really can say no to this bid which is 62% higher than Yahoo’s current share trading price. 62%, now that’s some sort of carrot to dangle.
The Yahoo board now has to consider whether to sell to one of their rival companies or risk further falling revenues.
