Institutional investors reacted positively to Microsofts bid for Yahoo!, although their enthusiasm was somewhat tempered by a drop in Microsofts share price. Microsoft has offered to acquire all of Yahoos common stock at $31 per share for a total deal price of about $44.6 billion.
Its a logical move for Microsoft to try and acquire Yahoo! I think (the deal) has been a long time coming, said Ken Allen, investment analyst who covers software stocks for T. Rowe Price. He added the acquisition could help Microsoft and Yahoo! better compete against Google.
Its a very good strategic move, but its not clear that the combined firm will make money. I think thats what the market said today, said the CIO of another large institutional Microsoft shareholder, who declined to be identified.
Microsoft closed at $30.45, down $2.15, while Yahoo! closed at $28.38, up $9.20. Both stocks trade on the Nasdaq.