In a surprise move yesterday, Microsoft made a cash-and-stock offer to buy search engine giant Yahoo for $31 a share, a deal which values the company at $44.6 billion. The offer comes at an opportunistic time for slumping Yahoo—share price, which had been at a four-year low, shot up 60 percent after the announcement. Yahoo’s chief rival, Google, is less enthused: Word of the deal, as well as a less-than-stellar fourth-quarter earnings report, caused its share price to drop 8 percent. (Google is currently trading at $527.40. It was as high as $747.24 back in November.)
Yahoo said today that it will “carefully and promptly” study Microsoft’s offer, noting that while former CEO Terry Semel had rebuffed a similar offer last year, the company’s financial situation has deteriorated significantly since then and isn’t showing signs of getting better. (Semel, who resigned as chairman after being forced out of the CEO slot by shareholders, also has a daughter who dated Lindsay Lohan, so poor judgment calls clearly run in the family.) Microsoft expects the deal to close in the second half of 2008.