Microsoft announced Friday their decision to offer to buy Yahoo!, taking all outstanding shares for $31 each in what would be a monster $44.6 billion deal. It would be a 62 percent bonus to shareholders holding a stock valued at under $20 Thursday.
Yahoo’s stock soared in early trading Friday, up over 50 percent at times.
“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.”
Yahoo said Friday it will “carefully and promptly” study Microsoft’s bid.
Microsoft made an offer to take over Yahoo! last year, but then chairman/CEO Terry Semel scoffed at it. But under shareholder pressure, Semel recently stepped aside. This new offer comes as the ink on new chairman Roy Bostock office door is still wet. In a letter, Microsoft also addressed Yahoo!’s current CEO and co-founder Jerry Yang.
In their letter, Microsoft said it could save at least $1 billion in cost savings generated by the combination, and that they would offer retention packages to Yahoo! engineers, leaders and employees.
“We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers,” Ballmer wrote in his letter to Yahoo!.
A combined Microsoft-Yahoo! force would be a stiff competitor to Google, who seems to have all but taken over the search engine world and leads in online advertising.
Microsoft said they would expect regulatory clearance and in the second half of 2008 if the deal is accepted.
The Associated Press has called the offer “unexpected.” Microsoft called the offer “compelling.” A struggling Yahoo! may have to carefully weigh their options.