Microsoft Has $45B Lying Around. Yahoo!
Microsoft Corp. today announced that it has made a proposal to the Yahoo! Inc. Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion. Microsoft’s proposal would allow the Yahoo! shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo! shareholders consisting of one-half cash and one-half Microsoft common stock. The offer represents a 62 percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008.
“We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market,” said Steve Ballmer, chief executive officer of Microsoft. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”
It's very unlikely that Yahoo! will turn this down, as the premium over value of the stock is very high. Regulatory agencies likely wouldn't balk at the acquisition, either, as Microsoft really isn't positioned strongly in the Internet search field yet, so competition is not diminished, just moved under a different name. Unless another suitor shows up with a better deal, this will likely happen as proposed.