USA/BELGIUM: Microsoft offers to buy Yahoo in a bid to challenge market share of Google's on-line search business

Record ID: 452092

  • Title: USA/BELGIUM: Microsoft offers to buy Yahoo in a bid to challenge market share of Google's on-line search business
  • Date: 2nd February 2008
  • Summary: (BN12) BRUSSELS, BELGIUM (FEBRUARY 1, 2008) (REUTERS) CATRIONA HATTON, PARTNER IN HOGAN & HARTSON LAW FIRM, HATTON READING REPORT HANDS ON REPORT (SOUNDBITE) (English) CATRIONA HATTON, PARTNER IN HOGAN & HARTSON LAW FIRM, SAYING: ''I suppose the question is whether if the U.S. agencies approve this deal, whether the Commission will go the same route and if the U.S. agencies impose remedies, whether the Commission will accept the same sort of remedies or whether they will be more stringent in their review of the deal. ''
  • Embargoed: 17th February 2008 12:00
  • Keywords:
  • Topics: Industry
  • Reuters ID: LVA5ZJBDGBZAJYLYV7TK94X8OR9Q
  • Story Text: Microsoft makes an unsolicited offer to buy Yahoo Inc for 44.6 billion U.S.
    dollars in cash and stock, seeking to bolster its position against Google Inc.
    The merger would be the biggest internet deal since AOL's acquisition of Time Warner.
    Microsoft Corp has made a bid to buy Yahoo Inc for 44.6 billion U.S.
    dollars in cash and stock, seeking to join forces against Google Inc in what would be the biggest Internet deal since the Time Warner-AOL merger.
    The world's biggest software maker is seeking a joint stand stand against an ever more powerful Google, whose share of the global Web search market has reached 77 percent, according to Internet audience researcher comScore. Yahoo is second with 16 percent and Microsoft was a distant third with 3.7 percent.
    In an audio webcast, Microsoft Chief Executive Steve Ballmer said the acquisition would be the right move for both companies.

    "This is a decision we thought, and I personally thought long and hard about. And we are very, very confident that it's the right path for Microsoft and for Yahoo," he said.
    Yahoo said on Friday (February 1) its board will evaluate the unsolicited bid.
    Yahoo has been losing market share to Google in the increasingly strategic Web search market, and warned earlier this week that it faced "headwinds" in 2008, forecasting revenue below Wall Street estimates.
    Microsoft's move is clearly aimed at challenging its archival, Google, which dominates the market for online search.
    Bobby Tulsiani, a media and internet video analyst, at Jupiter Research in New York, says Microsoft is making the move because it has been unsuccessful in luring users to its site, MSN.
    Tulsiani said: "They have been a laggard in search, so this is a good way to catch up. Yahoo has 20 percent search, Google has 50 percent search. Combine Microsoft, plus Yahoo and you get closer to catching up to Google. If you can't find the audience, then go buy the audience, and that's the major reason. There's a lot of other things now with Microsoft and Yahoo becoming the biggest e-mail provider, the biggest instant messenger, but primarily, this is about search."
    In Brussels, Catriona Hatton, a partner in Hogan & Hartson, an international law firm, said the European Union anti-trust regulators will look carefully into the bid, especially after Microsoft Corp was accused of breaking competition rules in a landmark ruling by the European Court of Justice in September 2007.
    She said: ''I suppose the question is whether if the U.S. agencies approve this deal, whether the Commission will go the same route and if the U.S. agencies impose remedies, whether the Commission will accept the same sort of remedies or whether they will be more stringent in their review of the deal.'' The European Commission declined to comment.
    Microsoft said on Friday it offered 31 U.S. dollars per share for Yahoo -- a 62 percent premium over the Internet media company's closing stock price on Nasdaq Thursday.
    Yahoo, whose shares jumped to 30.75 U.S. dollars in pre-market trading, said it would evaluate the bid.
    Microsoft shares, which have a market capitalization of about 300 billion U.S. dollars, fell 6 percent to 30.78 U.S. dollars.
    Critics of a potential merger have pointed out that Microsoft and Yahoo have very different corporate cultures and many overlapping businesses, from instant messaging to email and advertising, as well as news, travel and finance sites.
    Yahoo attracts more than 500 million people monthly to a range of media sites including Yahoo Mail, the world's biggest e-mail service for consumers.
    It has been losing market share to Google in the increasingly strategic Web search market, and warned earlier this week that Yahoo faced "headwinds" in 2008, forecasting revenue below Wall Street estimates.
    The Microsoft-Yahoo deal would be the largest in the internet market since the 182 billion U.S. dollars purchase of Time Warner Inc by AOL in 2001.
    That merger was seen as the worst marriage in recent corporate history, with clashing corporate cultures and many of the promised synergies never materializing.
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