The rumors had been flying for months now, that Microsoft may consider buying the second most popular internet search engine, Yahoo.com. Most analysts wrote them off as just internet rumors, however, Microsoft surprised us all this morning but entering a bid to buy Yahoo.
This wasn’t just any bid, not one that we think Yahoo can easily turn down. Microsoft offered to pay $44 billion, which is approximately $20 billion over the market cap of Yahoo. This means that if the deal was to go through, each Yahoo shareholder would receive almost double the current value of their shares. This is a hard offer for the board of directors at Yahoo to turn down. Yahoo just layed off 1000 employees last week, and could use the cash that Microsoft would bring into the equation.
The offer will be part shares, part cash, and would give Microsoft quite a standing against Google, who currently owns approximately 60% of all US search traffic.
What does this mean for the future of Yahoo, Microsoft and Google?
Well it will certainly drive innovation. With Yahoo and Microsoft teaming up they will have more power to take on Google, who in turn will likely have more incentive to innovate. If this deal does go through, we will quickly see major changes in the online search scene, and they will all likely be great for consumers.
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