Forbes contributor Peter Cohan asked the question if Microsoft should acquire Yahoo. He ultimately comes to the rational conclusion, which is definitely not.
He makes some good points, including that for the deal to make sense, the companies should operate better together than independently, which would not be the case here.
I don’t think it’s worth delving into too much, but the real reasons this deal won’t happen is simply because neither company wants to do it. While Microsoft did try to buy Yahoo in 2008, the world is very different now, with mobile being the big growth driver. I’m not sure Microsoft wants to buy a Yahoo that is still transitioning to demonstrate growth in that area. Further, if it’s one thing investors are saying (through Yahoo’s increasing stock price), is that they believe in Mayer and her ability to right the ship there (and to her credit, she has made it cool to work there again, an important step). Many argue that Yahoo’s stock is overvalued or that everyone is betting on future growth which the company hasn’t yet been able to show. So why would Yahoo want to sell now, unless Microsoft offers a crazy premium (on top of the perceived premium investors are already placing on it)?
Taking things a step further, the integration challenges here would be huge. Rarely do deals this large work out as intended, either because of cultural differences, poor integration, or synergies that never materialize. All those reasons would likely apply to a MSFT/YHOO deal.
You can read the Forbes post here.