Microsoft makes $44.6 billion offer for Yahoo

On January 30, 2008, Microsoft offered Yahoo!, Inc. $44.6 billion to merge both internet companies according to a story published in Reuters.

By merging, the businesses will be able to compete with the current popular web company Google Inc. According to Game Daily writer James Brightman, this would be the biggest merger since Time Warner Cable and America Online in 2000.

Reportedly, Microsoft offered Yahoo $31 per share in cash and stock, which means that in return, Yahoo would agree to allow Microsoft to dominate the banner ads often used by corporate brand advertisements. Yahoo and Microsoft are popularly used for their headline and financial news, sports and entertainment; but as far as a search engine, more people use Google.

Many wonder if this would be a foolish attempt for both Yahoo and Microsoft, and some believe that a merger would be doomed for failure, according to Game Daily. A Piper Jaffray analyst told Reuters that since Microsoft is tired of trying to fix MSN, the merger would be a perfect opportunity to take care of MSN and create a company able to compete with Google.

“They have to do it because they’ve tried everything they can do to fix MSN. Yahoo is the most visited site in the world, so it goes without saying that, given the current valuation, this is the perfect time for them to buy it,” Gene Munster, a Piper Jaffray analyst, told Reuters. “Google is running away with the search market and that’s obviously the best part of the market. The likelihood that Google gets caught is slim to none.”

However, Microsoft begged to differ and told Reuters that the merger would help turn both companies around.

“We have been losing money. Our plan here would be to not lose money in the future,” Steve Ballmer, Microsoft Chief Executive, told Reuters in a conference call. He added that he believed the deal will actually help the company grow and become successful.

But there will still be a ways to go before they can tackle Google, which purchased Adspace Media last February 2007, and already has the upper hand on in-game advertisements.

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