Model Answer to Exam Question: Mergers and Acquisitions

Overview

Which stakeholders, or group of stakeholders, were likely to have benefitted most or least as a result of the failure of Microsoft’s 2008 bid for Yahoo?
It is recognised that when attempted acquisitions fail a number of stakeholder groups associated with this event are likely to be positively or negatively affected. When Microsoft withdrew their bid for Yahoo in 2008, this will have impacted on five main groups of stakeholders.

In this particular case, the search engine giant Google would have gained from the failed bid. The combined Microsoft/Yahoo business could have posed a threat to Google’s market leader position, predominately because Microsoft had the capital and technological resources, as well as the customer base to pose a threat. Rapid expansion of Yahoo using these resources to gain market share was therefore likely to have impacted on Google’s performance and market value. However, the failure of the Microsoft bid has allowed Google to consolidate its position in the market place.