Microsoft moves in to buy Yahoo!

Transaction valued at approximately $44.6 billion in cash and stock;

Provides 62 percent premium to current trading price for Yahoo! shareholders;

Combined entity to create a more competitive company while providing superior value to shareholders and better choice and innovation for customers and partners.

REDMOND, Wash., Feb. 1 /PRNewswire-FirstCall/ — Microsoft Corp. (Nasdaq: MSFT - News) today announced that it has made a proposal to the Yahoo! Inc. (Nasdaq: YHOO - News) 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.

Our lives, our businesses, and even our society have been progressively transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure,” said Ray Ozzie, chief software architect at Microsoft. “The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own.

My opinion

This could make Microsoft a serious contender in the Internet arena against Google. I’d welcome the purchase with open arms because I can’t help feel that Google is going in the same direction as Microsoft did years ago. That is, monopolising its position. I mean, Microsoft was sued by the EU courts for forcing Real Player upon users of Windows based PCs. Will it force Google into sharing its search algorithms given that it has more than an 80% monopolistic share of online search?

Personally I think Microsoft is given a hard time mostly by those who like to take a shot across the bow as they think it’s the right thing to do. I’ve only ever met cool, creative and entrepreneurial people at Microsoft. I mean it, I have never met a Microsoft employee that was anything short of helpful.

As for Google… my last encounter (and I’ve had a lot of them) was with a guy who attended one of my tech dinners in Dublin recently (not BIMA related). I asked him, ’so, what do you do at Google?’. His response was surprisingly not surprising, ‘I can’t tell you as it’s a secret’. I understand that internal projects are somtimes confidential, but it’s the tone of the response I have become accustomed to from Google employees. It’s as if they’re above everyone else. He was a very nice chap and he’ll always be welcome at my dinner table.

Source Ana Nelson via Twitter. Full story can be found on Yahoo! news.

[Update here’s an interesting take from Denis Howlett]