Yahoo rejects Microsoft’s bid, considers merger with AOL

Yahoo considers resuming merger talks with America Online (AOL) after the Internet icon rejected Microsoft’s staggering 46-billion-dollar takeover bid. The company reportedly considers cooperation opportunities with Google and Disney.

The previous merger talks between Yahoo and AOL were suspended because of price differences between the two Internet giants. However, the talks are likely to be resumed again against the background of Microsoft’s recent unwelcome approach.

According to Web traffic analysis companies (including comScore, Alexa Internet and Netcraft), Yahoo has been one of the most visited websites on the Internet, with more than 130 million unique users per month. The global network of Yahoo! websites receives 3.4 billion page views per day on average as of October 2007, making it one of the most visited U.S. websites.

On February 1, 2008, Microsoft made an unsolicited bid to purchase Yahoo shares at the price of $31 per share, a bid valuing $44.6 billion for all the shares. The offer was turned down by Yahoo's board of directors on February 11.

Microsoft and Yahoo pursued merger discussions in 2005, 2006, and 2007, that were all ultimately unsuccessful. At the time, analysts were skeptical about the wisdom of a business combination. On February 1, 2008, after its friendly takeover offer was rebuffed by Yahoo, Microsoft made an unsolicited takeover bid to buy Yahoo for US$44.6 billion dollars in cash and stock. Days later, Yahoo considered alternatives to the merger with Microsoft, including a merger with internet giant Google. However, on February 11, 2008, Yahoo decided to reject Microsoft's offer as "substantially undervaluing" Yahoo's brand, audience, investments, and growth prospects.

AOL is a company in transition, made evident by discussions of buy-outs and joint ventures during a period of dramatic decline in AOL's subscriber base. News reports in late 2005 identified companies such as Yahoo!, Microsoft, and Google as candidates for turning AOL into a joint venture; those plans were apparently abandoned when it was revealed on December 20, 2005 that Google would purchase a 5% share of AOL for $1 billion.

Photo: projo.com

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