Is Microsoft Really Buying Out Yahoo!?

The word on stockbrokers’ lips for the last few months was an impending merger between two giants: Microsoft and Yahoo! Rumors that Microsoft will buy Yahoo first leaked last May of 2007 ( Microsoft to Buy Yahoo! ).

The last official short-selling data from Nasdaq showed about 3.2 percent of Yahoo shares were held short on January 31, before Microsoft’s offer was announced. Microsoft was offering $44.6 billion to take over Yahoo!, or perhaps an additional $5 billion to cover the real cost of Yahoo! shares on the market. However, just a few days later, Yahoo! backed out of the deal and refused the billion dollar takeover. What happened?

Mergers Mean Big Money

Microsoft first offered the buyout deal on the first of February, 2008. Ten days later, news leaked out that Yahoo! was refusing. In fact, Google, yet another Internet giant, was urging Yahoo! to take a very good look at the deal, and to avert a takeover. Google has long been known to be wary of any activity that would potentially ensure Microsoft’s near monopoly or at least, ubiquity online.

According to the Yahoo! board, the offer by Microsoft was deemed inadequate, even as there were no other bidders present who would offer much higher prices for Yahoo! stock. Now that Yahoo! has turned Microsoft away, shareholders of the search engine are more worried: the buyout would have brought about higher stock prices, which would benefit the company, which, in turn, has been slowing down and falling into business slumps in the last few years.

So, What’s Next?

Headlines are showing Yahoo! going after multimedia giant America Online (AOL), so there may be hope on the horizon for another merger. And moreover, Google still remains in the background, so this struggling company can still rise to its feet and reclaim its position as a fighter in the Internet arena.