New York: Microsoft Corp, the software giant, said on Friday it had offered to acquire Internet media company Yahoo Inc in a proposed cash and stock deal valued at $44.6 billion.
Microsoft said it had offered to buy Yahoo for $31 per share, which it said represented a 62 per cent premium above the company's closing stock price on Nasdaq on Thursday.
Here are a few reactions from market experts on the proposed marriage of Yahoo and MSN.
Laura Martin, Analyst at Soleil-Media Metrics in New York
"It's about time. Great for Microsoft. Great for Yahoo shareholders. These Internet markets are winner-take-all markets and they cannot be built. Time is too valuable. Yahoo has one of the best positions on the Internet because it's integrated brand (advertising) with search."
"There could be a little more money on the table. The company is in play. Yahoo will not be able to stay independent. Other bidders will emerge before this is over. Not Google — they can't even get DoubleClick closed, they won't get Yahoo closed."
"They're in a pole position in several major industries. I expect News (Corp), Comcast, and GE will look at it. But Microsoft is paying a lot because they're trying to scare away other bidders."
Tim Smalls, Head of US Stock Trading at brokerage firm Execution LLC in Greenwich, Connecticut
"Shocking! To me, the premium seems exorbitant, for what is a dwindling business. I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google."
"It will obviously help the stock market immensely — the overall market loves a big deal, here you go, and the futures are screaming. This is going to take everybody's attention today. Especially in a distressed market, if you get a financial deal or a technology deal, that's really going to captivate the market and that's what you've got right now."
Gene Munster, Analyst, Piper Jaffray, Minneapolis, Minnesota
"They have to do it because they've tried everything they can do to fix MSN. Yahoo is the most visited site in the world, so it goes without saying that given the current valuation, this is the perfect time for them to buy it. Google is running away with the search market and that's obviously the best part of the market. The likelihood that Google gets caught is slim to none."
"You might not catch Google, but you can still be a legitimate player."
Ben Wood, UK-based director of tech research at CCS Insight
"Yahoo! delivers Microsoft a well-known web entity with a strong user base (particularly in the US), one of the largest email user communities and a wealth of other assets such as photosharing website Flickr. Yahoo!'s considerable expertise and assets in online advertising (such as its Panama platform) is relevant both in the fixed and mobile worlds. Its notable that Yahoo! already had deals with a number of mobile network operators around the world including Vodafone and T-Mobile in the UK."
Brendan Barnicle, Analyst, Pacific Crest Securities, Portland, Oregan
"Microsoft's wanted to do things that could build up its online business dramatically. This is one more thing that allows them to do that. This is going to be a big bet for them. But I also think it's where they see the market going, so they really needed to get there."
"This is more than a shot across the bow at Google, because you put these two guys together who are basically two and three in search and makes them far more relevant."
Mark May, Analyst at Needham & Compacy in New York
"I think the issue is going to be one of valuation. While a substantial premium to their recent trading price, this is in line with Yahoo's average trading value over the last two years. Looked at that way, it's not a substantial premium."
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"You've got a company that is in the midst of a turnaround. You're going to have this battle between of investors that believe in Jerry Yang's new vision and new strategy and investors that don't believe in that strategy. I would not be surprised to see this bid have to be raised over time."
"I think there are companies out there like Comcast and Viacom and others that still need to address the emergence of online media and haven't. So there are clearly other strategic companies out there, mainly traditional media companies, that should, and based on reports, have looked at Yahoo in the past."
Colin Gillis, Analyst at Canaccord Adams
"We think it is great for Yahoo shareholders. This consolidates the marketplace down to Google versus Microsoft. Their multiple areas overlap — not just search but also applications. Google's been pushing hard into the application space."
"YahooMail continues to be much slower than the Gmail product. Yahoo search continues to lose share to Google." Asked whether Google might counterbid for Yahoo, he said, "There is really nothing there that Google wants that they (Google) don't have."
Rob Breza, Managing Director at RBC Capital Markets
"Microsoft has been getting more aggressive with acquisitions. We've seen them start to step up and buy large public players. Strategically, it makes sense. It's a fair price. Clearly Yahoo shares have been under pressure. Microsoft wants to get it done, and get it done quickly. Trying to offer them a 10 percent premium would be kind of foolish. You'd create a problem, you'd let other bidders get into the fray."
Pail Mendelsohn, Chief Investment Strategist, Windham Financial Services, Charlotte, Vermont
"That seems to be eclipsing everything and set the futures off and running. That's obviously important to the (stock) market. It's been looking for something like this for quite some time, and it's offsetting the Google news from last night. So this is good timing on Microsoft's part, and discounting the bad news in the technology sector."
"I think (a deal) makes sense. Yahoo is having a really tough time competing against Google. Whether it's a good price, I can't see anybody else who is going to outbid Microsoft."
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