The Microsoft-Yahoo! Mating Dance

Recently Microsoft made a bid to takeover Yahoo! for 44.6 Billion dollars, an offer Microsoft called "full and fair" in an official release February 11th. Yahoo didn't see it the same way.

In a release following the offer Board directors at the famous search engine's corporation said the offer substantially undervalues Yahoo's worth. The rhetoric in Yahoo's statement does indicate that they are willing to sell if the price is right, but the current bid is not in the best interest of their shareholders. It is likely that this kind of back and forth could go on for a few weeks and eventually Microsoft will give in and up the ante. This is a scenario many expect to happen.

However there is the chance that Microsoft believes the offer to be fair and thereby unwilling to offer more for Yahoo. If this happens things could get ugly between the directors of both corporations. Microsoft has reserved the right to take all possible steps if Yahoo sits idly by, meaning they can take it right to the shareholders. However Yahoo has a defense for this, allowing shareholders to buy stock at a significant discount if an unwanted bidder buys 15% or more of its shares. Microsoft would then have to put people on the Board at Yahoo willing to accept the deal. These steps are certainly not inevitable, for if Yahoo truly wants to sell then it is likely a deal will be met given Microsoft's ample finances. But it will be interesting to see how things unfold between these two computer giants.

There are certain apprehensions which are there in the minds of people regarding the deal, few of them are:

• The most challenging hurdle in acquisitions and mergers is the cultural match between the two companies. Microsoft is going to have a tough time matching two venture cultures, considering the fact of Yahoo's Silicon Valley origins. Even if the combination of two giants proves to be lucrative for both parties, the synergy may come late in the process.

• Why can't Microsoft do it all themselves. Yahoo! is a dying brand. For $45 billion, they can do a lot themselves.

• It will increase Microsofts monopoly in the internet market.

In the end to conclude I would say that this is a step in teh right direction by microsoft, but it should not be teh only way, because you can't succeed if you followonly one path. Newer steps should be taken, and efforts should be made that past mistakes which microsoft did with Hotmail are not repeated.

To share your views on teh topic, just comment me.