Microsoft to buy Yahoo!?

4 May 2007

It has been reported that Microsoft is actively seeking to acquire Yahoo! in order to compete with search engine giant Google.

According to reports in The New York Post and The Wall Street Journal, Microsoft has already asked Yahoo! to enter into formal negotiations for a rumoured US$50bn.

Yahoo Inc would be set to benefit considerably from this acquisition because as of last Thursday its net worth was US$38bn.

The Wall Street Journal reported that early-stage talks between executives at the two companies were in fact already under way. However, the companies had already considered joining forces last year but this was put on ice.

Although Yahoo! would reap immediate financially benefits from such a deal, Microsoft is well behind both Yahoo! and Google in the area of online search and its revenue-generating search engine marketing but would benefit in the long term.

The New York Post suggests that this recent move by Microsoft reveals a nervous company looking to move quickly in the face of Google’s latest acquisition of DoubleClick, a company that Microsoft founder and chairman Bill Gates had his eye on.

These rumours circulating around the two companies have caused Yahoo! shares to leap 16.7pc to US$32.88 on Friday while Microsoft’s shares dropped nearly a full percent to US$30.67.

By Marie Boran