Microsoft attempting to take over Yahoo

Microsoft CEO Steve Ballmer is a leader in the attempt to take over Yahoo

Yahoo is attempting to ensure an alliance with Google in desperation to prevent a takeover by Microsoft. The move could bring an ugly end to the two-year long purchasing battle between the tech giants.

Yahoo is attempting to ensure an alliance with Google in desperation to prevent a takeover by Microsoft.  The move could bring an ugly end to the two-year long purchasing battle between the tech giants, according to the Associated Press. 

The battle between Microsoft and Yahoo began in late 2006 when Microsoft’s Chief Executive Steve Ballmer wrote a letter discussing a possible merger between the two companies.  After several meetings between Ballmer and Yahoo’s then chief executive, Terry S. Semel, talks ended.  Semel apparently ended the talks claiming the merger was unnecessary.

“The two companies may have different business cultures which may be conflicting,” said John Carroll University finance professor LeRoy Brooks.  He added, “There could also be conflicting egos between the companies’ managers.”  

Google, eager to avoid a takeover, has agreed to allow Yahoo to take part in an unorthodox experiment.  Yahoo will be allowed to use Google’s advertising space in an effort to see how much the company can sell to Yahoo.

The test date for the experiment could be set as early as April 26.

However, any long-term merger or partnership between Google and Yahoo would face problems with anti-trust laws in both America and Europe, where regulations exist concerning such mergers.  

The companies control over 80 percent of the U.S. search engine capacity.   

Additionally, Yahoo is negotiating a deal with AOL Time-Warner that would give the company 20 percent of Yahoo’s shares and combine Internet operations of both companies. Nevertheless, a deal between the two companies seems unlikely and would face criticism from share holders. 

Both companies have faced a decline with Yahoo being devalued by over $30 billion in the last two years.

AOL’s value has also decreased by $10 billion, roughly half of its 2005 market value.

With the deadline for Microsoft’s $44.6 billion offer to Yahoo ending on April 26, Yahoo’s deal with Google has made it less likely for a cordial agreement to be reached between the two companies.  

Microsoft has stated that if an agreement cannot be reached by the set deadline, it will begin a proxy contest with Yahoo’s Board of Directors.  

A proxy contest would involve Microsoft making a case to Yahoo’s share holders as to why the company should merge with Microsoft.  
If the dispute reaches this point, the two companies could drag it out through much of the summer. If Microsoft does eventually acquire Yahoo, it is unlikely that Yahoo will disappear.

According to Brooks, “Yahoo still has the potential to make money.”