Microsoft close to Yahoo deal
Microsoft is reported to be close to buying the search arm of rival web firm Yahoo, according to industry sources. The two companies were said to be in late-stage negotiations which would see Microsoft purchase Yahoo’s search engine division for around $3 billion (£1.8 billion).
Insider sources told the Silicon Valley blog All Things Digital’ that a deal was close to being completed. This message was echoed by a William Morrison, a financial analyst at the ThinkEquity investment group. Morrison described the agreement as ‘imminent’.
The news of a deal comes 18 months after Microsoft launched a $45 billion bid to buy Yahoo in February, 2008. This offer was rejected by officials at Yahoo as it was thought to be below the estimated worth of the company.
Share of the search market
According to research by the internet research firm ComScore, Yahoo controls 19.5 per cent of the US search market. At present Microsoft holds just eight per cent. Google owns 65 per cent of the search industry.
Industry analysts have said that a deal between the firms may be advantageous for both companies. Many commentators are predicting that Microsoft’s latest search engine, Bing, will lose its modest share of the market after its $100 million marketing campaign ends. An agreement with Yahoo would see Microsoft dramatically increase its share to over 30 per cent of the American search market. Elsewhere, Yahoo may be encouraged to accept the agreement if the company has posted poor fiscal results for the last quarter. This information is released next week.
