On the surface, I don't see how Yahoo can say no to Microsoft's offer. It's premium of 60% over their current share price. And it's likely far higher than any other company would bid. But that still doesn't mean it's an easy acquisition or that it makes sense strategically for either firm. For Microsoft it's an admission that despite many years of effort, their online strategy has largely failed. According to Br On the surface, I don’t see how Yahoo can say no to Microsoft’s offer. It’s premium of 60% over their current share price. And it’s likely far higher than any other company would bid. But that still doesn’t mean it’s an easy acquisition or that it makes sense strategically for either firm.For Microsoft it’s an admission that despite many years of effort, their online strategy has largely failed. According to Brent Hill of Citigroup quoted in a New York Times article, it’s the only division in Microsoft that’s losing money. Could this be the move that enables Microsoft to leapfrog Google? I don’t think so. Even the combined assets of Microsot and Yahoo still lag far behind Google in most areas. Matt Asay over at CNet views this deal as proof that Microsoft’s best days are behind them. That may be true, but I can’t fault Microsoft for making a move to try to make them more relevent. But I’m not sure acquiring Yahoo is enough. And if you think I’m skeptical, maybe the harshest analysis is from Fake Steve Jobs who views this as the ultimate admission that Microsoft is plain out of ideas.Yahoo is itself is coming out of a difficult period. They have struggled in recent years with declining income and plans to cut 1000 jobs to try and improve things. Yahoo has some strong areas (email, especially) but they’ve also lost ground in recent years. So how does combining two losing companies make for a winning strategy? Maybe the combination of Microsoft + Yahoo becomes a credible competitor to Google. But so far, other than larger scale, there’s nothing here that suggests the combination would have any advantage over Google. And the further you look into the details the more complex it becomes. -Will Yahoo accept Microsoft’s offer? -Will any other bidders emerge? -Will Microsoft keep the Yahoo brand? -Will Microsoft absorb Yahoo or let it operate independently? -What happens to directly competitive divisions within the companies? -Will the US and European governments approve the merger? -Will employees stick around during this time? Lets see how this plays out. But I don’t expect a lot of answers any time soon. The truth on this one will only be known many years from now. Open Source