Microsoft Offers $44.6B for Yahoo!

This sort of deal has been rumored for some time, but now it's reality - or at least the offer is. Microsoft has made a proposal to Yahoo!, offering $31 / share, or $44.6B, to acquire the company. This would be a 62% premium over yesterday's closing price. The payout to Yahoo! shareholders would be 1/2 in cash and 1/2 in Microsoft shares. Microsoft estimated the deal could close in the second half of this year.

In the press release, Steve Ballmer, CEO of Microsoft said:

"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. We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."

In a responding press release, Yahoo clearly indicated the offer was unsolicited, but under consideration by the Board of Directors.

It's clear from the PowerPoint of the conference call that Microsoft is pushing synergies between the companies, as well as scaling. Otherwise known as, "combined we can better fight the Google giant."

At the start of the conference call, Steve Ballmer said:

"This is a decision we have — and I have — thought long and hard about. We are confident it's the right path for Microsoft and Yahoo."

Additionally, Ballmer said:

• They have been in conversations with Yahoo! for 18 months (see, those rumors were right!)

• He called Jerry Yang yesterday to discuss the offer.

So, what's going to happen now? Second half of CY08 may mean as late as December, and despite some thoughts by Kevin Johnson, President of Platforms & Services that the AQuantive and TellMe integrations went smoothly, thus this should as well - er, those companies were just a tiny bit smaller.

Branding? Is the Yahoo! brand going to go bye-bye? A lot of skirting the issue in the call, so who knows?

It seems obvious the public nature of the offer is to put the Yahoo! board under shareholder pressure - and it ought to work based on the premium given. More to come, obviously.