Microsoft has signed a nondisclosure agreement with Yahoo. TPG Capital and others are allowed to look closer at Yahoo’s Financial books. Microsoft invested in billions of dollars into the company. Microsofts current interest is to preserve the lucrative partnership between the company and web pioneer. The company also wants to integrate Skype into yahoo. Yahoo’s shares went up more than 1%.
Microsoft is aggressively creating a strong company by acquiring other firms. This will create a competitive edge for Microsoft to go against other firms in the market. In order for Microsoft to remain competitive and expand, Microsoft had to merge/acquire their competitors. (Microsoft has acquired Skype and hopes to integrate it with its newly invested firm, Yahoo) Other reasons to why Microsoft acted, opportunity to enter a new market, good distribution capability or combination of companies can create greater profitability.