This morning Microsoft extended an unsolicited bid to buy Yahoo for $44.6 billion, or $31 per share, amounting to a 62 percent premium on Yahoo’s Jan 31 closing stock price. Said Microsoft in today’s press release, “We don’t actually want the company, we just wanted to see what the media would do“… okay, maybe they didn’t say that exactly. But in the search world, it’s an understatement to call this bid a big deal (note Techmeme screenshot left).
For Searchviews readers, here’s a rundown of what happened and what’s important to take away:
Microsoft Wants To Buy Yahoo
…They have for awhile (see rumors from 2007, 2006). Recognizing Google’s unrivaled lead in traffic & technology, Microsoft sees an opportunity to tap Yahoo for its audience, engineering talent, brand value (esp. in search), and social media properties (Flickr & Del.icio.us). In the meantime, Yahoo has spent the past month hemorrhaging money and employees, and is in serious need of a bail out. So far, industry analysts broadly agree that a deal is likely to happen.
What’s the Deal?
There is much discussion about the terms and implications of the deal. Here’re a few standouts:
- Henry Blodget says the deal will happen on Microsoft’s terms, since Yahoo is desperate, and there’ll be no competitors to counter MSFT’s offer.
- Paul Kedrosky says it’ll happen, but the conjoined Microsoft-Yahoo still won’t beat Google.
- Danny Sullivan envisions a lovechild born of Yahoo search, Microsoft ads, Yahoo’s audience, Microsoft’s “technological prowess”, and Flickr.
- Loren Baker concurs that Yahoo Search will take over Microsoft’s Live Search, and predicts that old-school SEO practitioners will feel some pain, while secondary search engines (Ask.com) will potentially gain market share.
- Shar Van Boskirk writes on Forrester’s blog that the merger will help grow online advertising by yielding “laser-target ads” & easier ad management. Shar also has some interesting thoughts about increasing convergence of media + technology.
Though the combined search impact is undoubtedly huge, the opportunities in display should not be overlooked. A combined MSFT/YHOO would be the clear leader in display advertising, reaping the benefits of Yahoo’s traffic volume and Microsoft’s ad serving technology (esp in wake of their aQuantive acquisition).