Microsoft-Yahoo: An offer you can’t refuse

So Godfather Ballmer has stepped in and put on the Yahoo! doorstep a $44.6bn offer, half in cash and half in Microsoft shares.

That’s a 62% premium to yesterday’s share price. In Hollywood-speak, that’s an offer you can’t refuse.

I am also somewhat impressed by the following sentence in Steve Ballmer’s letter to the board of Yahoo!, outlining the synergies from the proposed combination and going into the proposed process for getting the deal done:

In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.

Which is, of course, exactly what they did. For some reason, this communication strategy seems to me like a sure winner.

4 thoughts on “Microsoft-Yahoo: An offer you can’t refuse

  1. Imagine a world where Microsoft and Google teamed up, instead of Microsoft and Yahoo!.

    For that reason alone, i hope they succeed in buying what’s left of Yahoo!’s empire.

    Only thing is, for the sake of the world, the deal would have to preclude Microsoft from then going on to ALSO purchase Google…

  2. I think the odds are against Microsoft and a successful ending of the proposed merger.

    Mergers and acquisitions are usually difficult or outright impossible. Nine times over ten, only merchant banks and shareholders quick enough to take the money and run gains from mergers.

    Moreover, “Offers you can’t refuse” rarely leave goodwill between the parts. 🙂

  3. Indeed I’m afraid no one but shareholders have something to win from Micro$soft-Yahoo! merge.

    IMO – This is really a bad news for the web & Freedom.

    As soon as Yahoo (if ever) becomes another Micro$oft product I cancel all the services I use from Yahoo!

  4. Microsoft’s bid for Yahoo got industry pundits salivating to levels unseen since the dotcom bubble. Not at all an IT expert, but I simply wonder if teaming up two losers is enough to make a winner.

    Companies like Yahoo and Google are not capital-constrained but talent-constrained. If acquired by Microsoft, Yahoo will contribute to approx 10% of the revenues of the combined entity. I can’t figure out how a marginal subsidiary of a software house can aggressively compete for web talents. A young and ambitious web engineer will still opt for nimbler organisations offering sizable exposure to equity upside. Many of Yahoo’s key resources may consider leaving their company for competitors whose topline they can impact more materially. And without attracting and retaining the brightest web specialists, Microsoft, even with Yahoo, will struggle to become that beacon of internet innovations it aspires to be.

    In a 10 year time, Microsoft bid will be a serious contender for the Compaq-Digital combination prize, awarded to initially visionary and ultimately irrelevant combinations. Funny thing is that, on Feb 1st, a transaction with massive global implications was actually announced…but was not Microsoft’s. As I’ve mumbled too much, I let the inquisitive readers of this engaging blog to find it out by themselves (hint: target’s market cap is about 4x Yahoo’s – no typo).

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