Microsoft has proposed to yahoo for a merger. The premium seems to be exorbitant. Microsoft had in fact placed this proposal for $44.6bn. As per BBC's Tim Weber, this is a shotgun marriage, where the short gun is held by Google :)
What Microsoft claims, would apparently benefit from this merger is:
- Scale economics: When the scale goes high the log run average cost decreases.
- Expanded R&D capacity: The combined brain of both the engineer's can be focused on R&D priorities.
- Operational efficiencies: Eliminating redundant infrastructure and duplicate operating costs.
Microsoft even offer significant retention packages to Yahoo employees.
Microsoft had earlier, in 2007 made an offer of merging the business, which Yahoo Bord had declined,anticipating a steep in the Yahoo shares. But yahoo had a very bad, last year. Their shares started from $31 and dipped to $19.1. But Microsoft has offered $31 in cash based on Microsoft closing shares on 31st Jan 2008 or or 0.9509 of a share of Microsoft common stock. This looks really a fantastic offer for me, and a tough time ahead for Google. When a fusion of both these technology company merge, its gonna be too loud, for google's voice. Yahoo chairman Jerry Yang, had announced earlier a lay off of 1,000 employees, as part of it's restructuring. Lets keep our finger's crossed and watch this!!
