Microsoft Corp. has pounced on slumping Internet icon Yahoo Inc. with an unsolicited takeover offer of $44.6 billion in its boldest bid yet to challenge Google Inc.’s dominance of the lucrative online search and advertising markets.
The announcement sent Yahoo’s share price up 60 percent in premarket trading, while Google fell 8 percent.
In a letter to Yahoo’s board of directors, Microsoft Chief Executive Steve Ballmer indicated the world’s largest software maker is determined to bring the two companies together.
Microsoft sent its latest takeover offer to Yahoo late Thursday, shortly after Semel resigned as the company’s chairman. The letter is addressed to Semel’s successors, new Chairman Roy Bostock and the current CEO, co-founder Jerry Yang, who is one of Yahoo’s largest shareholders.
“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,” Ballmer wrote.
Yahoo didn’t immediately respond for requests for comment.
Under terms of the proposed deal, Yahoo shareholders could choose to receive cash or Microsoft common shares, with the total purchase consisting of 50 percent cash and 50 percent stock.
Microsoft said it sees at least $1 billion in cost savings generated by the combination, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees. The software giant said it believes the takeover would receive regulatory clearance and close in the second half of 2008.
Signaling Microsoft doesn’t intend to take no for an answer, Ballmer wrote that the company “reserves the right to pursue all necessary steps to ensure that Yahoo’s shareholders are provided with the opportunity to realize the value inherent in our proposal.”
Mediaoutrage- Interesting first Microsoft sinks $500 million into Facebook a few months ago, and now they want to buy Yahoo!. They are definitely trying to keep pace with Google.