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Microsoft goes after Yahoo

Steve Henn Feb 1, 2008


Renita Jablonski: Feeling hungry this morning? Microsoft is.
The software goliath has offered to gobble up Yahoo with a $44 billion takeover bid. Marketplace’s Steve Henn reports.

Steve Henn: The deal offers Yahoo’s shareholders a 62 percent premium above what their stock was trading at just yesterday. But analysts say unlike the late 90’s, when Microsoft seemed unstoppable, today’s deal is a glaring example that executives there are increasingly panicked about a certain search engine that must not be named.

Microsoft explained its bid in a statement today saying the market for online advertising is quote, “increasingly dominated by just one company.” Read: Google. Even after a merger, the combined companies would have just 27 percent of online search advertising, and they’d trail Google by 13 percent in all online ads.

But Microsoft’s executives say a merger with Yahoo would give the combined company the resources and market share to become a serious competitor. Before that happens, the final details of a deal need to hammered out and win the blessing of federal regulators.

In Washington, I’m Steve Henn for Marketplace.

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