For all the reasons a Microsoft acquisition of Yahoo! doesn’t make sense, one factor trumped them all: a bargain. Early this morning, Microsoft made an unsolicited bid for the Internet pioneer for $31 a share, 62% higher than Yahoo’s closing price of $19.18 yesterday. Yahoo’s stock has fallen far enough that, even though Microsoft is offering $44.6 billion for a company the market valued at only about $25 billion (until now—the stock’s up about 50% this morning, for a market cap of $38 billion), it was too much of a steal to pass up.
At such a premium, which likely will go higher, it would seem that Yahoo would be hard-pressed to turn down such a deal—even though the company surely preferred not to sell at this time. If it goes through, we suddenly have a two-horse race on the Net, with Microsoft-Yahoo the one force with a chance to slow down search giant Google.