Microsoft Corp. has pounced on slumping Internet icon Yahoo Inc. with an unsolicited takeover offer of $42 billion in its boldest bid yet to challenge Google Inc.'s dominance of the lucrative online search and advertising markets.
In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer said the company will bid $31 per share, representing a 62 percent premium to Yahoo's closing stock price Thursday, and emphasized that the deal isn't subject to financing."In February 2007, I received a letter from your chairman indicating the view of the Yahoo board that now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction," Ballmer wrote.
"According to that letter, the principal reason for this view was the Yahoo board's confidence in the 'potential upside' if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment."
"A year has gone by, and the competitive situation has not improved," Ballmer added.
Under the terms of the proposed deal, Yahoo shareholders could choose to receive cash or Microsoft common shares, with the total purchase consisting of 50 percent each cash and stock.
Earlier this week, Yahoo cofounder and Chief Executive Jerry Yang said the company intended to axe 1,000 jobs, or 7 percent of its workforce, in an effort to cut costs.
Microsoft said it sees at least $1 billion cost savings generated by the merger, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees. It believes the takeover would receive regulatory clearance and close in the second half of 2008.
For the rest of the story and the full text of the letter from Steve Ballmer to Yahoo's Board of Directors, please head here.
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