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Microsoft offers $44.6 Billion for Yahoo & why Yahoo will accept

Boris Written on 1st February 2008                                                                                                              12 COMMENTS some text
Boris Veldhuijzen van Zanten, Serial Internet Entrepreneur

Everybody is talking about it: Microsoft today made an offer to buy Yahoo for 44.6 Billion. Just last week we discussed buying some options for Yahoo because its stock was trading around 20 dollars. Now the web is buzzing with the news.

We heard the news while attending a Lunch2.0 at eBuddy. Several phones suddenly started beeping buzzing and ringing and suddenly eBuddy CEO Onno Bakker brought up Yahoo Finance on the big monitor where seconds ago we were still looking at a presentation. Its main headline was “Microsoft Offers $44.6B for Yahoo“. Within seconds everybody was talking about it. One entrepreneur told me “Just imagining Microsoft owning Yahoo gives me goosebumps. I don’t like it at all”. Others were less negative and pointed out the benefits of strong competition for Google.

Patrick pointed out that we heard similar (but wrong) rumors while we visited Yahoo Brickhouse in San Francisco last year where they told us to just ignore it. Inside Yahoo they called it ‘the dance’. They explained that every year Yahoo and Microsoft people get together to talk about working together which always lead to rumors but never turned out to be anything.

Based on that story I’m assuming this public offer by Microsoft is actually the result of extensive talks between Microsoft and Yahoo. The Yahoo Finance story speaks of a ’surprise offer’ but since we know Microsoft and Yahoo have been getting together regularly in the past few years this probably isn’t really that much of a surprise to Yahoo. It also is hard to imagine that Microsoft would make such a bold public offer if it didn’t already know the answer.

My prediction: Yahoo will resist a little, put up a little fight and then give in and accept the offer.

About the author: Serial entrepreneur and founder of several companies. Current activities include TwitterCounter.com & this Blog. Boris is also very active on Twitter: @Boris

12 comments/trackbacks to “Microsoft offers $44.6 Billion for Yahoo & why Yahoo will accept”

  1. Feb 4, 2008: So what’s the latest on Microsoft and Yahoo?

    [...] Yahoo means losing the ‘media/tech blogger license’. Yet since Boris already wrote an thorough analysis about the possible deal on The Next Web Blog, I prefer to just give you an update on the latest [...]

  2. May 5, 2008: Vor- und Nachteile: Übernahme Yahoo durch Microsoft | DimidoBlog

    [...] Der Preis liegt momentarn bei rund 45 Milliarden US-Dollar. Wobei es sicher nicht bleiben wird, da Yahoo-Aktionäre einen Bonus verlangen werden, wie bei jeder Übernahme und Fusion üblich. Hinzu kommt, [...]

  1. By David Petherick on Feb 1, 2008

    If I had shares in Yahoo, I’d have to accept the offer.

    It’s a 50% premium on yesterday’s close, and it wasn’t going anywhere but down.

    The letter of offer from Microsoft to Yahoo’s board is fairly stark anyway – it’s accept, or be devoured: “Depending on the nature of your response, Microsoft 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.”

    I’ve started a competition to name the new entity at http://also.cc – win a year’s free hosting! Entries close next Friday at 12:00 GMT!

    Reply

  2. By Robert Gaal on Feb 1, 2008

    So uh, where’s the answer to the why? :)

    Reply

  3. By Boris Veldhuijzen van Zanten on Feb 1, 2008

    @Robert: I thought that was clear from my story but I updated it and explained it more. Do you get my point now?

    Reply

  4. By LivePaola on Feb 1, 2008

    Steve Ballmer is looking like Marlon Brando: this is an offer they can’t refuse. Less sexy, though :-)

    Reply

  5. By Robert Gaal on Feb 1, 2008

    @Boris: aha, got it, thanks!

    Reply

  6. By David Petherick on Feb 1, 2008

    Current price for Yahoo just broke $29 in pre-market trading. It closed at $19.18 yesterday afternoon, then Yahoo’s Chairman resigned. And then the letter arrived from Steve Ballmer.

    Looks like the market has already decided it makes sense for this to happen.

    Reply

  7. By matt on Feb 1, 2008

    I don’t like when microsoft buy every web things.

    Reply

  8. By Drivingsouth on Feb 2, 2008

    The Daimler-Chrysler of the web IMHO.

    Anyway, David Petherick: if i had, i wouldn’t sell so soon. Others are in the race and it is far from over

    Reply

  9. By Doron on Feb 2, 2008

    dont forget about the hedge funds guys.

    Reply

  10. By tom on Feb 2, 2008

    I seriously wonder what the employees of yahoo might think. Yahoo has hired some of the most influencal people in the opensource world. Employees have been working their whole carreer to compete and eliminate competition from MS. And now they have to work together with closed source technologies. Traditionally Microsoft converted all of its aquisitions to its own technologies. If Ms buys yahoo there will be a lot of internal conflicts about this.

    Reply

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