Microsoft pursues merger with Yahoo

It looks like someone finally listened to the federal government and decided to spend in order to stimulate the flagging economy. Yesterday, Microsoft announced it has placed a bid on online giant Yahoo for $31 a share, totaling $44.6 billion. The merger would put added pressure on both companies' rival and current online leader Google.

While Microsoft holds steady as the world’s largest software maker, its foothold in the web world has slipped for years. According to the latest Alexa Internet web trafficking data, Google is the most visited site followed by Yahoo; Windows Live and MSN fall at number six and nine respectively. All three companies have built their online presence on their search engines and e-mail domains.

The news sent Yahoo’s stock (YHOO) soaring with a 48.0% increase in price. However, both Microsoft (MSFT) and Google (GOOG) took small hits with 6.6% and 8.6% decrease respectively. The U.S. stock market did rally because of the news, posting mild gains but still influenced by the news of January’s 17,000 layoffs.

This isn’t Microsoft’s first foray into merging companies, the last attempt being in May of 2007. Currently, Yahoo’s board is reviewing the bid. If the proposal is accepted, it will then have to be taken to the shareholders for a vote. Analysts are already speculating that the United States and European Union will investigate possible anti-trust violations if the merger completes.

Related links:
Wall Street Journal: Microsoft Unveils $44.6 Billion bid for Web Ad, Search Rival Yahoo
NPR: Microsoft Offers $44.6 Billion for Yahoo
CNN Money: Why Microsoft’s Yahoo Bid Makes Sense

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