Microsoft Captures 50.1% of MSN Israel Stake

Posted by Vaibhav

July 9, 2008

World’s largest software firm Microsoft Corporation made a big announcement recently about striking a deal to acquire the 50.1% stake in MSN Israel that it does not own already, for an unrevealed sum from Internet Gold Ltd.

Both the parties agreed that Microsoft will operate the online portal independently from October this year, without providing additional details regarding the financial terms of the agreement. The Internet Gold Group owns 50.1% stake while Microsoft Corporation owns the remaining stake in MSN Israel, which was incorporated in the year 2000.

General Manager of Microsoft Israel, Danny Yamin said that the internet business world has undergone tremendous changes ever since the company launched MSN Israel eight years back. He further opined what was right then does not necessarily make sense today, and informed about Microsoft’s planning to take some of the foundations formed by the MSN online portal. He continued that the idea is to integrate Microsoft’s Windows Live products in order to create a better product and more value for Israeli internet surfers, thereby deepening Microsoft’s impact on the Israel market.

With the integrated Windows Live services, consumers would be able to interact and engage with MSN and, more importantly, with each other. Terming this as the ‘service portal’, Yamin said that content forms an essential part of this strategy.

He also confirmed that the MSN Israel portal would continue to operate even during the transition phase, and added that the two parties were working as a unit to provide support for its stakeholders including employees, advertisers, as well as users throughout this period.

In the meantime, reports were confirmed about MSN Israel general manager Shraga Mor resigning, and in response to reports that one third of the company’s staff will be shown the exit, Yamin stated that part of the staff will be employed as Microsoft’s Israel workers. He hoped that no worker will be fired, but said that these situations tend to bring in shakeups sometimes.

MSN operates as a global portal network in 44 countries, and in almost all these nations, the MSN portal is entirely controlled by Microsoft. However, in a very few cases, Microsoft has joined hands with a domestic partner to establish a local portal of MSN.

CEO of Internet Gold, Eli Holtzman expressed happiness about partnering with the software king in establishing MSN Israel since the last eight years.

In addition, Holtzman said that the group had expanded its activities significantly in a range of communication areas over the past two years, due to which the MSN Israel operations now represented a minor part of the group’s total revenues. It is known that in the previous year, MSN Israel accounted not even 3% of Internet Gold’s total revenues.

Hence, the company recently decided to change gears and look for other growth alternatives.

Finally, Holtzman said that the company is actively examining fresh and financially significant areas of activity in and out of Israel on a continuous basis, with hope that these areas have substantial growth potential and will help drive the group to its next business phase.

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