Academic

So we are snowy here in Champaign (and at home due to K-12 school closures), but things seem to be heating up in the online search and advertising industry!  Microsoft, after being rebuffed by Yahoo management, has gone public with its offer to acquire Yahoo at a 62% premium (that's over $44 billion to you and me).  WSJ article here.

What will happen?  Will Yahoo management feel pressure to accept this offer, coming on the heels of Yahoo news regarding layoffs, etc.?  Will, as the article suggests, Microsoft "go hostile"?  This could get very interesting.  Here we thought that the acquisition world was increasingly dominated by private equity taking firms private, and here's a good, old-fashioned merger of two publicly-held companies!  In addition, should Yahoo be acquired, Yahoo's disappearance may be a sign of the final end of the dot com era.  After years of consolidation of the first search firms to arrive on the Internet scene, Yahoo will be the acquired, not the acquirer.

What about competition concerns?  Will merger approval be easy or not so easy?  (Those seem to be the only two possibilities these days, at least in the U.S.)  Microsoft seems to be anticipating these concerns.  In its letter to Yahoo management, Microsoft management tells us not-so-subtly that Microsoft is no longer the biggest kid on the block:

Today this [advertising platform provider] market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.

Hmmm. Who could that "one player" be? While other combinations have cited Microsoft as creating competition in various markets, Microsoft is now pointing to Google as a reason to let this merger slide on by.

The "market for Yahoo" may not be as competitive as the advertising platform provider market.  With Microsoft's big pocket, other bidders may stay away.

UPDATE:  My colleague Larry Ribstein has more here.