Microsoft changes M&A strategy with Yahoo! bid

Microsoft's $44.6bn bid for web giant Yahoo! represents a step change in approach from a company which has traditionally shied away from big-money acquisitions.

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But, say analysts, although Microsoft has acted to take on Google, acquiring Yahoo! isn't a deal that it must secure at any cost.

Andrew Frank, research VP at Gartner, told silicon.com: "Microsoft's culture has been more of a build it than buy it kind of culture. I think they've often felt there are few things that they couldn't do better internally."

He added: "I think this is probably one of the few cases where [Microsoft] really felt that their own efforts weren't getting them where they wanted to be fast enough."

David Mitchell, senior VP at analyst Ovum, said: "They've [Microsoft] typically gone for a number of intellectual property driven acquisitions. This is a change in M&A strategy."

But despite the ambition of the bid, Frank said it's not essential for Microsoft to acquire Yahoo!.

"I don't think this is a do or die deal for them. I don't think that they've bet the future of the company on this deal by any means. I think it's crucially important but on the other hand I don't think - if for some reason the deal doesn't happen - that you're looking at anything dire happening to Microsoft. It's more opportunity than threat," he said.

If the deal does happen Frank predicts the two companies would be able to integrate effectively, with Yahoo! unlikely to be too tightly managed.

He said: "I think this is more of a media deal and in media I don't think you have to work quite as hard to integrate all of the moving parts."

Mitchell also said the merger would be viable. "I frankly don't buy the culture clash angle… Microsoft does not have a single corporate culture anyway," he said.

But Mitchell acknowledged there will still be challenges. He said: "I wouldn't say this was a walk in the park, a big M&A is always tough."

Comparing the Yahoo! bid with other deals rumoured in the past, Frank said: "I think that this one is far more serious. There's cash on the table, there's a company that looks like it's in a position to be acquired."