Microsoft Offers $44.6 Billion To Acquire Yahoo

Microsoft has made an unsolicited $44.6 billion cash and stock bid for Yahoo, a deal that shakes up the competitive and lucrative market for Internet search…

In a copy of the letter it sent to Yahoo’s board of directors, Microsoft disclosed it had explored a Microsoft-Yahoo deal a year earlier, only to be rebuffed with Yahoo telling it at that time it was confident of the “potential upside” for Yahoo from operational changes it planned.

"A year has gone by, and the competitive situation has not improved," the letter from Microsoft CEO Steve Ballmer said.


The offer, for $31 a share in cash and stock, represents a 62% premium to Yahoo's closing price Thursday. Yahoo's shares have lost about 40% of their value during the past three months.


Microsoft said Yahoo holders would be able to trade each of their shares for $ 31 in cash or 0.9509 of a Microsoft share, pro-rated so that no more than half of the overall purchase price is paid in cash. The deal values Yahoo at 65 times earnings. Based on Thursday's closing price, Yahoo trades at 40 times earnings, according to FactSet Research.