This morning, Microsoft announced its intent to buy Yahoo with an unsolicited USD$44.6 billion cash and stock bid. The offer represents a 62 percent premium on Yahoo shares.
“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.”
The joining of the two companies promises to create a more efficient company with efficiencies of scale in four areas: scale economics driven by audience critical mass and increased value for advertisers; combined engineering talent to accelerate innovation; operational efficiencies through elimination of redundant cost; and the ability to innovate in emerging user experiences such as video and mobile.
Yahoo, which reported lower fourth-quarter earnings earlier this week and announced layoffs, acknowledged the offer and is reviewing it.