Slashdot Mirror
Microsoft Bids $44.6 Billion For Yahoo
The news is everywhere this morning about Microsoft's $44.6B offer to buy Yahoo. The offer represents $31 a share, a 62% premium over Thursday's closing price; and Yahoo's stock price has been rising in after-hours trading. Microsoft has been making overtures to Yahoo since 2006, according to the CNet article, including a buyout offer last February that was rebuffed. Mediapost.com has some perspective on the deal from the point of view of ads and eyeballs. Such an acquisition, which would be Microsoft's largest by far — it bought Aquantive last year for $6 billion — would need approval by US and EU authorities. A European Commission spokesman declined to comment.
Seems so unlikely to ever be allowed by the regulators, yet they're willing to throw billions at it anyway. They must feel confident for some reason.
A consolidation of the Microsoft and Yahoo networks could shift a massive amount of infrastructure from open source technologies to Microsoft platforms.Microsoft said that "eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity." Yahoo has been a major player in several open soruce projects. Most of Yahoo's infrastructure runs on FreeBSD, and the lead developer of PHP, Rasmus Lerdorf, works as an engineer at Yahoo. Yahoo has also been a major contributor to Hadoop, an open source technology for distributed computing. Data Center Knowledge has more on the infrastructure implications.
Now MS should bid for Pirate Bay aswell!
With an astonishing 62% premium price of its current stock price, Microsoft sent this proposal to the Yahoo! Board of Directors. Here's the . Actually, part of the premium price is explainable by the recent sunk of Yahoo! stock.
January 31, 2008
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer
Dear Members of the Board:
I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft's closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.
Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.
We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!'s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft's share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.
Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.
In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that "now is not the right time from the perspective of our shareholders to enter into discus
Apple iProduct. Non importa cosa sia, lo comprerete!
So this means people will begin avoiding Yahoo with the same impunity they avoid MSN?
Theoretically Microsoft could buy up anything good about the internet so we can all shut our computers down and settle in w/a trip to the library and a good book.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
Interesting that - imagine building a business using online apps, only to have your supplier go under and get bought out in some botched effort, and then lose history...
I think there are a number of serious implications in this MS/Yahoo deal. The monopoly aspect is actually the least problematic: the loss of history is a greater problem.
But then, maybe the Feds under a Democratic Admin will say "nuh uh!" and kill the deal...
RS
Shoes for Industry. Shoes for the Dead.
Maybe, but the possibility of there only being two main search engines out there, with the next largest competitor Ask.com at a paltry 4.1%, is fairly scary.
It was only a matter of time before Microsoft decided to try to get a final regulatory pass from the Bush administration before the inauguration of a less-sympathetic President in 2009.
This deal makes a lot of sense for Microsoft (sort of - I'm assuming Yahoo!'s ad business really is worth the cash), but I can't see how this is at all good for Yahoo! or the marketplace at large.
Is the plan to re-brand everything as Microsoft Live! (keeping the exclamation mark) - thus destroying pretty much the only thing Yahoo! has going for it - brand recognition?
I would be very sad to see Yahoo! and their odd collection of services get subsumed and destroyed in a merger with Microsoft. Yes, I'm assuming much of Yahoo!'s tech portfolio would be wiped away or left to die - this wouldn't be the sort of merger Adobe engineered with Macromedia by a long shot.
Shit, now this means the photos I have on flickr are going to be owned by Microsoft? Oy vey. Can we have a "good photo sharing site" thread now so I can find the alternatives?
gameDB
For a heavy internet user like me, this news comes as a crisis of conscience. Having been a loyal Yahoo! Mail user for over a decade (the world's largest webmail service), and having so much of my online presence on Yahoo's comprehensive services - Contacts, Flickr, online document storage, Messenger, Y!Finance, Groups, (the list is endless) - I am obvioulsy deeply loyal to an independent Yahoo! ...But one reason that I've allowed Yahoo! to gradually become such an important part of my life is that it's NOT Microsoft. The same sentiments are felt by millions: will loyalty to a very useful Yahoo! be enough to overcome our distaste for Microsoft and the inevitable changes a takeover will entail? This is not insignificant nor a "religious platform issue" - note how Hotmail has fallen from #1 spot in email users after the MS takeover, for example. Yahoo! webmail alone reportedly accounts for 255 million of the world's 543 million webmail accounts, and webmail is only one of a vast range of internet & open source items Yahoo! is involved in.
Yahoo News itself is reporting this as a hostile takeover, but seemingly with Microsoft willing to pay such a large premium, one that will be hard to resist. It's interesting that Microsoft is willing to use up almost all of it's cash reserves for this takeover, largely sacrificing it's flexibility to make strategic investments in the future. But from the perspective of Yahoo! users the more important question is whether a MS takeover will turn Yahoo! into tepid porridge? And will the long, slow decline of Microsoft now drag Yahoo! down too?
If this deal goes through, expect to hear a gigantic sucking sound coming from the direction of Flickr.
blog
I cannot comment on the entirety of Asia, but I am an Indian and from a state called Andhra Pradesh (Hyderabad, in case you have heard of it). We speak a language called 'Telugu' here. I doubt if more than 1 or 2 percent of the world has heard of it.
The amount of Internet penetration here is very very less, apart from Hyderabad. Google is so popular that it is part of our songs [Like Bollywood, which are Hindi films, we have our own industry of sorts with Telugu films and yes they all have songs].
When a movie song has Google in it, it is because the average movie-goer knows what it is.
Google has become a part of our language. The same with some other regional languages include the National language Hindi.
... and I shall strike upon thee with great vegeance, furious anger and a slightly positive karma.
OK, Yahoo isn't a small company. This isn't like other acquisitions MS has made. This is more like a Compaq buying DEC. Think about it, Yahoo is sort of losing against Google. So Microsoft is buying a faltering competitor to (a) merge income and (2) reduce the competition by one player.
That makes the game Microsoft vs Google.
Now, can Microsoft really take on Yahoo without destroying it? Will it be like when Compaq bought DEC? Or will it work? Yahoo is all FreeBSD, the engineers there HATE and laugh at Microsoft and its products. I know for a fact that moral will sink and people will leave Yahoo.
There is something different going on here. FAST, Fast Search and Transfer, previous owners of www.alltheweb.com, a search engine competitor to google in the late 1990s split from its search engine business which it sold to overture, which was bought by Yahoo. Microsoft is currently in the process of buying FAST, and next on the agenda is Yahoo. Bringing back together, the two halves of the old company.
It may be a coincidence, but it is curious. Why would Microsoft buy technology that it arguably already has or could build cheaper? What is it they are out to get? Are there patents or other "intellectual property" owned collectively by the two parts of FAST that they can use to sue Google?
Also, Yahoo is a HUGE open source user/contributor. A purchase by Microsoft will almost certainly reduce the number and amount of contribution to the open source environment.
Lastlt, isn't this *exactly* what the Sherman act was designed to prevent?
Reminds me of the Sony root kit debacle, the blogger who released the information about the root kit, his association with M$ and that M$ was fully aware of the root kit well before it's release and for some odd reason the release of the information about the root kit coincided with the launch of the PS3.
The Sony rootkit debacle began in October 2005. The PS3 was released in November 2006. How, exactly, did these two events coincide?
Just because it can't be explained doesn't mean it isn't true. Science fits into reality... not the other way around.