I'll bet those that recently sold their Yahoo! (Nasdaq:YHOO) stock are kicking themselves, as a $44.6 billion bid from Microsoft (Nasdaq:MSFT) caused the stock to surge 48 percent higher after the news of the bid came out.
After a long time of attempting to cut into Google's (Nasdaq:GOOG) online advertising share in a significant way, and failing, this is an obvious way to significantly increase the competitiveness of both companies with Google.
The usual concerns over whether this will help take market share from Google, with the challenges of integrating the companies that accompanies any merger were raised, but I'm not necessarily convinced that is he immediate strategy of the potential acquisition.
While the two companies use different platforms for search, that's only a matter of deciding which one to continue on with under the new corporate umbrella.
Of course the other side of it is there are a lot of synergies between the companies as well, which would work together well if they end up merging.
Yahoo's board of directors are much more open this time, after rejecting the exploration of a deal last year, thinking they could turn things around. Now that a turnaround is nowhere in site, they will probably go forward with this deal, although they will probably ask for a sweetener over the $31 a share offered by Microsoft, which was a 62 percent premium over Thurday's close.
"Last year, Yahoo told investors it needed more time to get on the right track," says UBS analyst Benjamin Schachter. "But you only get a certain amount of time to turn things around."
Reactions to the potential deal have been across the board, from people thinking it could be a disaster, and no value being added to Microsoft, to it being great deal, which will position the company for the ongoing surge in advertising money going to the Internet.
The offer was for half in cash and the other half in shares. Yahoo shareholders could opt to receive cash for the deal or a fixed number of Microsoft shares.
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