I cannot believe the press this morning, but it’s official Microsoft has made a hostile takeover bid for Yahoo! All of us in the SEM industry have heard this ‘rumor’ before, now it’s for real!

The announcement of Microsoft’s $44.6 billion bid for Yahoo! didn’t come as a total surprise, these two courtesans have danced around before. A merger of these two have been speculated over for the past 18 months, ever since the companies discussed collaborating in late 2006.

Make no mistake; this deal will close. The $31 per share offer represents a 62% premium over Yahoo!’s market close Thursday.

How can the Yahoo! Board say no? We can’t find many reasons (especially with T.Semel no longer pulling the purse strings). Either way, they should not combine the names; as you can see above neither is very appealing “Yah-soft” or “Micro-hoo” (both sound like childrens candy names to me)

See Latest News Coverage:
Microsoft, Yahoo! In Possible Partnership Talks
A Messy Marriage
Microsoft/Yahoo Merger to Take on Google?
5 reasons to worry about a Microsoft/Yahoo merger
Justice Department likely to review a Microsoft-Yahoo merger

UPDATE:
BlogNewsChannel posted an amazing writeup on the proposed merger see below:

* About 30% of the search engine marketplace. Microsoft has wanted a position to challenge Google for a long time, and this would give them a big enough search engine to hopefully make some noise. However, Microsoft would have to reverse Yahoo’s decline in order to take advantage of that market share.
* Yahoo Mail and Windows Live Hotmail. Yahoo claims 255 million email account, Microsoft 280 million. Reports put Gmail at around 51 million accounts. If properly leveraged, Microsoft’s 500 million-plus accounts could represent an insurmountable number one.
* Yahoo Messenger and Windows Live Messenger. As of 2006, Microsoft had 61% market share worldwide, good for #1, and Yahoo had between 27% and 37%. Yahoo’s number were the same as AOL Instant Messengers (there is more than 100% because users often use more than one client). Google Talk is a non-factor practically abandoned project, and Microsoft one-two punch could bury this market for good.
* Advertising revenue. Microsoft pulled in $1.5 billion from its online services division in 2007, most of it in ad dollars, losing $510 million. Yahoo made $7 billion in 2007, turned a profit of $700 million, on $6.088 billion in advertising revenue. It isn’t quite Google’s $16 billion, but Yahoo is a profitable online advertising company, and gives Microsoft a strong, larger base to grow from. It will take seven year for Yahoo to make enough revenue to cover the acquisition cost.

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