Microsoft offers $44.6 Billion for Yahoo Shares

Microsoft just announced a proposal to acquire all outstanding shares of Yahoo! Microsoft's proposal to Yahoo's board of directors represents $31 per share (a 62% premium over yesterday's closing price) or about $44.6 Billion.

Steve Ballmer, CEO and big fan of developers, says, "We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market." Apparently, the deal was laid out in a letter sent by Ballmer to Yahoo's board just yesterday. Seriously. The letter confirms that the two giants have been discussing the topic since late 2006. It also appears to be a direct response to the Google threat as outlined in the following paragraph:

"Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers."

The deal, of course, rests with the two coming to a "merger agreement" and Microsoft (and Yahoo to a limited degree) having the time to conduct the required due diligence. Microsoft is ready to begin immediate discussions and have a draft merger agreement ready for consideration. So Yahoo, ball's in your court. The world is wondering... what will you do?

Yahoo! Board of Directors and management team unanimously concluded that the proposal is not in the best interests of Yahoo! and its stockholders

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.

But Microsoft responded and seems persistent on the deal.

We are offering shareholders superior value and the opportunity to participate in the upside of the combined company. The combination also offers an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market. A Microsoft-Yahoo! combination will create a more effective company that would provide greater value and service to our customers. Furthermore, the combination will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising. The Yahoo! response does not change our belief in the strategic and financial merits of our proposal.

Google seems very concerned about the future of the Internet

Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ email, IM, and web-based services? Policymakers around the world need to ask these questions — and consumers deserve satisfying answers.

It seems Yahoo! is seeking to restart merger talks with AOL as a means of defending itself against the $45 billion hostile bid approach from Microsoft.

My personal perspective is, that we don't need such big market giant (Microsoft + Yahoo), because it won't brings us nothing good! That's for sure!