Yahoo Spurns Microsoft
By Staff
The world’s largest software manufacturer, Microsoft Corporation, has reportedly made a $44.5 billion offer for Internet search pioneer Yahoo Inc.

However, the Associated Press reports that the offer is likely to be rebuffed as Yahoo’s board feels the unsolicited offer undervalues its slumping business.

Microsoft would like to expand its clout online with Yahoo struggling recently due to its inability to target online advertisements as effectively as rival Google. Microsoft believes Yahoo's brand, engineers, audience and services would provide it with valuable weapons in its so far unsuccessful attempt to narrow Google's huge lead in the lucrative Internet search and advertising markets.

According to industry experts, Yahoo has considered an advertising partnership with Google in order to thwart Microsoft. While such an alliance would boost the profits of both companies, it would also face competition issues and be scrutinised by antitrust regulators in the United States and Europe.

Microsoft could attempt to override Yahoo's board by taking its offer, originally valued at $31 per share, directly to the shareholders but pursuing this risky route would probably require Microsoft to attempt to oust Yahoo's current ten-member board.

Alternatively, Microsoft could sweeten its bid with many analysts believing it is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock.

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