Microsoft’s bid for Yahoo!
Microsoft’s bid for Yahoo!
WHY?
Microsoft had long been eyeing at merging with Yahoo! since 2006, the two companies explored and discussed how they might work together for some time, however the proposal was rejected by Yahoo!, by saying that was “not the right time from the perspective of shareholders” in 2007. The repeated turndowns, however, didn’t make Microsoft give up. In January 2008, Microsoft proposed to Yahoo! again to achieve industry consolidation and convergence. In the letter of proposal Microsoft listed out main reasons as follows:-
1) Acquisition can create synergy which makes the combination of corporations more profitable and effective than individual one. Synergies include both search and non-search related advertising platform. The sharing of research and development resources would help lowering capital spending. New chemistry between talents from two companies would unleash new levels of innovation that neither one has this on their own.
2) There would also be operational efficiencies by eliminating redundant infrastructure and duplicative operating costs. More importantly, Microsoft would like to combine with Yahoo! and turn the organization into an effective competitor in the online marketplace that drive innovation in emerging scenarios such as mobile services and online commerce. http://www.shoemoney.com/2006/12/16/10-reasons-why-microsoft-will-aquire-yahoo-in-2007 Despite all these diplomatic benefits listed, everyone understood the true intention is to strategically join with Yahoo! to fight in search engine market with Google, which was not only the most popular but also a still growing competitor at that point in time.
WHEN & HOW? Looking at the stock price of Microsoft and Yahoo! since September 2007, it is not difficult to understand why Microsoft picked Jan 08 to propose this. Since September 2007, both Microsoft’s and Yahoo!’spricewere having a similar uptrend performance. However, starting from November 07,
WHY?
Microsoft had long been eyeing at merging with Yahoo! since 2006, the two companies explored and discussed how they might work together for some time, however the proposal was rejected by Yahoo!, by saying that was “not the right time from the perspective of shareholders” in 2007. The repeated turndowns, however, didn’t make Microsoft give up. In January 2008, Microsoft proposed to Yahoo! again to achieve industry consolidation and convergence. In the letter of proposal Microsoft listed out main reasons as follows:-
1) Acquisition can create synergy which makes the combination of corporations more profitable and effective than individual one. Synergies include both search and non-search related advertising platform. The sharing of research and development resources would help lowering capital spending. New chemistry between talents from two companies would unleash new levels of innovation that neither one has this on their own.
2) There would also be operational efficiencies by eliminating redundant infrastructure and duplicative operating costs. More importantly, Microsoft would like to combine with Yahoo! and turn the organization into an effective competitor in the online marketplace that drive innovation in emerging scenarios such as mobile services and online commerce. http://www.shoemoney.com/2006/12/16/10-reasons-why-microsoft-will-aquire-yahoo-in-2007 Despite all these diplomatic benefits listed, everyone understood the true intention is to strategically join with Yahoo! to fight in search engine market with Google, which was not only the most popular but also a still growing competitor at that point in time.
WHEN & HOW? Looking at the stock price of Microsoft and Yahoo! since September 2007, it is not difficult to understand why Microsoft picked Jan 08 to propose this. Since September 2007, both Microsoft’s and Yahoo!’spricewere having a similar uptrend performance. However, starting from November 07,