Microsoft to acquire Yahoo?

New York (NY) - A new mega merger may be on the way, if there is truth in a rumor that is making the rounds on Friday : According to a report published by the New York Post, Microsoft is planning to purchase Yahoo in a deal that could approach a value of $50 billion and result in more than twice the number of visitors to Google’s sites.

Microsoft apparently has been in informal talks with Yahoo several times over the past years. According to the New York Post, Microsoft’s renewed interest has been fueled by Google’s recent acquisition DoubleClick, which increases an already existing dominance in online advertising for Google.

If Microsoft and Yahoo come to an agreement, the two firms are estimated to have a 27% stake in the quickly growing search advertising market - compared to the 65% of Google. Microsoft’s market share in search would climb to about 33%, still trailing Google, which is estimated by Nielsen Netratings to run about 54% of all search requests. The gap in overall ad revenue share would shrink to only 13%, the New York Post said.

Aside from the fact that Yahoo could be complementing Microsoft’s online offerings and drive more interest to its products and devices such as the Zune player, another significant benefit to Microsoft would be the increased number of visitors to its sites. According to Nielsen Netratings, Microsoft already leads the global visitor ranking with about 121 million visits per month. With the addition of Yahoo, the number theoretically jumps to 232 million, which more than twice the audience Google reaches (113 million).

The stock market reacted immediately to the rumors, lifting Yahoo’s stock by about 15%. Yahoo had a market capitalization of just over $38 billion at market close on Thursday, indicating that Microsoft would have to pay somewhere between $45 to $50 billion to takeover Yahoo. Microsoft’s warchest currently holds $28.2 billion in cash and short term investments.