Microsoft Puts Yahoo in a $44 Billion Bear Hug

February 01, 2008 11:05 AM
by findingDulcinea Staff
Microsoft publicly discloses its takeover bid for Yahoo, hoping that Yahoo's major stockholders will pressure its board to accept. The long-term plan is to compete more effectively with Google in online advertising.

30-Second Summary

Microsoft Corp. has publicly disclosed that it made an offer to acquire Yahoo for $31 a share, payable in a combination of cash and Microsoft stock.

The stock offer is a 62 percent premium on Thursday’s closing price of Yahoo.

A statement issued by Microsoft observes that online advertising “is increasingly dominated by Google. Together, Microsoft and Yahoo can offer competition while better fulfilling the needs of customers and partners.”

Yahoo, whose Board Chairman Terry Semel resigned yesterday, issued a statement saying that its board will evaluate the offer carefully and promptly. Henry Blodget, of digital business blog Silicon Alley Insider, describes the “aggressive” takeover bid as “a brilliant move by Microsoft.”

By making the offer public, writes Blodget, Microsoft is “going over the head of Yahoo’s management team straight to independent shareholders, in the hopes that the shareholders will force management to sell.”

Microsoft and Yahoo have been engaged in merger talks before. The discussions ended in early 2007, and analysts at Forbes concluded that had a deal gone ahead it would have presented only a meager threat to Google’s dominance.

Headline Links: ‘Microsoft Makes Bid for Yahoo’

Background: ‘Why Yahoo Can’t Fix Microsoft’

Reaction: Yahoo responds

Opinion & Analysis: Henry Blodget

Reference: Bear hugs

Historical Context: Hostile takeovers


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