Wednesday, April 2, 2008

Microsoft, Yahoo agree on buyout price

After much internal debate and industry speculation, Yahoo today agreed to be acquired by Microsoft, adding $2.6 billion to Redmond's original offer of $44.6 billion on Jan. 31.

The agreement was reached near midnight last night, thus closing a contentious quarter for the Web company, one rife with in-fighting and power jockeying since Microsoft's initial offer.

Of the agreed $47.2 billion, $10 billion is in cash and the rest in stock, with $1.12 of Microsoft stock being swapped for each share of Yahoo stock, roughly a 12-cent-per-share premium over Yahoo’s $29.05 closing stock price on Monday.

The final price -- $33 per share vs. the original $31-per-share offer -- was less than Yahoo’s board wanted, sources said, but its recent “poison pill” actions such as providing all employees with four to 24 months of severance, based on their level in the company, should they be laid off in an acquisition, limited its ability to obtain a higher offer from either Microsoft or another firm such as Google, said Arbor Research analyst Jane Simons.

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