Microsoft offers to buy Yahoo in $44 billion swoop

 

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By Barry Collins and Reuters

Posted on 1 Feb 2008 at 12:27

Microsoft has offered to buy Yahoo for a staggering $44.6 billion (£22.4 billion) in cash and stock.

Click here to read Steve Ballmer's thoughts on the potential takeover

Click here to read Barry Collins' verdict on the deal

The software giant has long been rumoured to be interested in Yahoo, but after heavy speculation last summer that a deal was imminent, the rumours had died down.

Microsoft has clearly grown tired of negotiating, with Yahoo admitting that the offer is "unsolicited". The company will now "evaluate this proposal carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximise long-term value for shareholders," it says in a statement.

Microsoft will pay $31 per share, which represents a 62% premium above the company's closing stock price on Nasdaq on Thursday. The offer is half cash, half equity, with Microsoft planning to close the deal in the second half of this year.

"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," Microsoft Chief Executive Steve Ballmer says in a statement.

Microsoft said it had identified four areas that would generate at least $1 billion in annual synergies for the combined entity: critical mass and increased value for advertisers, engineering, research and development, and reduced operational costs.

Yahoo shares rose 56% to $29.95 in pre-market trading on Friday following the announcement.