Microsoft has offered Yahoo a $44.6 billion bid which would generously give shareholders a 62 percent premium on their shares for the search engine company.
A combined Microsoft and Yahoo would likely be a major step forward for online advertising. Online advertising is projected to grow to $80 billion by 2010, which can assist Microsoft to grab a larger slice of that pie if it can pull in Yahoo while stealing market share from Google.
Yahoo ranks as the world’s heaviest trafficked web property on the Internet.
Microsoft and Yahoo had been strongly thought of as likely strategic partners or acquirers of AOL. Now such a deal appears off the board, leaving Time Warner to look elsewhere for a long-term solution for AOL.
Reactions from analysts have varied, with some doubting that the double deal would improve the international companies to take market share from Google. Moreover, a concern is the challenge of integrating two massive high-tech companies with different skill sets and corporate cultures.
The blockbuster offer has the potential to become one of the largest technology sales of all time. It would give Microsoft ancillary benefits, such as a stake in Alibaba.com (the eBay of China), Yahoo! China and Yahoo! Japan. Not to mention that although mobile search is a burgeoning market, a combined Microsoft and Yahoo! could have a stronger position against Google, which has every intention of trying to dominate the mobile market.