MicroHoo: Deal failure,industry rivalry,and sources of overbidding |
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| Institution: | 1. From the Endocrine Institute, Rabin Medical Center, Beilinson Hospital, Petah Tikva, Israel;2. Department of Pathology, Rabin Medical Center, Beilinson Hospital, Petah Tikva, Israel;3. Endocrine Institute, Assaf Harofeh Medical Center, Zriffin, Israel;4. Sackler Faculty of Medicine, Tel Aviv University, Tel Aviv, Israel.;1. Department of Pathology, Tianjin Medical University General Hospital, Tianjin, PR China;2. Department of Nuclear Medicine, Tianjin Medical University General Hospital, Tianjin, PR China;3. Department of Pathology, Tianjin First Center Hospital, Tianjin, PR China;4. Department of General Surgery, Tianjin Medical University General Hospital, Tianjin, PR China;5. Tianjin Key Laboratory of Lung Cancer Metastasis and Tumor Microenviroment, Tianjin Lung Cancer Institute, Tianjin Medical University General Hospital, Tianjin, PR China;6. Department of Endocrinology, Tianjin Medical University General Hospital, Tianjin, PR China;7. Department of Nuclear Medicine, Second Affiliated Hospital of Zhejiang Medical University, Hangzhou, PR China |
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| Abstract: | On February 1, 2008, Microsoft offered $43.7 billion for Yahoo. This offer was a milestone in the battle between Microsoft and Google to control the Internet search industry. The announcement accompanied a substantial decrease in Microsoft's stock price. Investors apparently considered the bid too high and doubted Microsoft's ability to create value with Yahoo's assets (the announcement combined returns implied a total value destruction of $13.29 billion). Using the abnormal returns pattern of industry firms and customers, this article examines the sources of overbidding. Our analyses indicate that Microsoft's aggressive move is rooted in its rivalry with Google, but the personality traits of the involved CEOs might explain also a portion of the overbidding. |
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