Microsoft makes the case and bid for Yahoo!

Microsoft may have a competitive edge to match Google, if Yahoo! agrees to be bought for $44.6 billion. Microsoft announced the bid for Yahoo! on Friday.

Microsoft may have a competitive edge to match Google, if Yahoo! agrees to be bought for $44.6 billion. Microsoft announced the bid for Yahoo! on Friday. According to The New York Times, the consummation of a deal could potentially change the competitive landscape of the Internet consumer services business and save approximately $1 billion annually.

Valleywag posted the bid, which came in the form of a letter from Microsoft CEO Steve Ballmer, confirming a collaborative exploration, as far back as 2006, of how the two companies could work together “to create a more effective competitor in the online marketplace.” From the letter:

“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.' 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.”

…nor have Yahoo!'s struggles, reported earlier this week. The $31/share offer would represent a 62% premium over Yahoo!'s closing stock of $19.18 on Thursday.

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