In 2008, Microsoft Corp. caused a stir in the online industry as it revealed its plan to acquire Yahoo! Inc. With the support of Silver Lake Partners, a private firm, Microsoft proposed to Yahoo a $44.6 billion buyout deal on January 2008.
Yahoo turned down the offer, and instead ended up with a 10-year search partnership in 2009. The Microsoft-Yahoo partnership has gained Microsoft a substantial 30% of the market share, but resulted to the dropping of Yahoo stocks from $29 - prior to the rejection of the $44.6 billion proposal - to $15 as of September 2011.
Since declining Microsoft's $44.6 billion bid in 2008, Yahoo has watched its stocks drop as low as 44%. As a result, the company has been presenting itself to prospective buyers, owing to its failure to increase revenue.
This time around, Microsoft is poised to make a joint proposal, still partnering with private equity firms - but for a bidding price that is expected to be substantially lower than the $44.6 billion offer three years back. With declining revenues, Yahoo is projected to agree a takeover bid.
Why Buy Yahoo?
Despite of the not-so-good figures in revenue, Yahoo presents highly attractive assets, including its stake in Yahoo! Japan and China-based online company Alibaba Group Holding Ltd. Microsoft's interest in Yahoo is particularly hinged in its goal to rival Google while getting the benefits of shared operational efficiencies and costs.
Apparently, Microsoft is interested to take Yahoo under its wing to help increase market share, and make things a little more difficult for colossal nemesis, Google - which has practically been unchallenged for years.
Google Gets into the Picture
The potential dealings involving Yahoo Inc. are mounting, and gaining a momentum at that.
More possibilities are brewing as a recent Wall Street Journal report reveals the latest talks between Google, Inc., among other private equity firms, and the rival search engine in question. With Google expressing serious interest getting Yahoo out of Microsoft's hands, the bidding war is on.
Google is eyeing to steer its business and software strategies toward selling advertisements across Yahoo sites, and reaping Yahoo's $2 billion a year display-ad business arm. Moreover, buying Yahoo translates to social networking platform Google+ making its way to Yahoo's audience. Google is also interested in having deeper business relationships with premium-content publishers for Yahoo - all aimed at making matters more difficult for competitors, including Microsoft.
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