Microsoft buys 50.1% stake in MSN Israel

"We are planning to create more value for Israeli surfers and deepen our impact on the Israeli market," said Danny Yamin, general manager of Microsoft Israel.

msn israel 88 224 (photo credit: Courtesy)
msn israel 88 224
(photo credit: Courtesy)
Microsoft Corporation, the world's largest software company, announced on Sunday that it has struck an agreement to purchase the 50.1 percent stake it doesn't already own in the MSN Israel online portal from Internet Gold Ltd. for an undisclosed sum. The two parties reached an agreement for Microsoft to operate the internet portal independently from October without providing further details about the financial terms of the deal. MSN Israel, which was formed in 2000, is 50.1% owned by the Internet Gold Group and 49.9% owned by Microsoft Corporation. "From when we launched MSN Israel eight years ago, the online business world has undergone many changes, and what was right then does not necessarily make sense now," said Danny Yamin, general manager of Microsoft Israel, in a telephone interview with The Jerusalem Post. "We are planning to take some of the foundations established by the MSN portal and integrate our own Windows Live products to develop a better product, create more value for Israeli surfers and deepen our impact on the Israeli market." Yamin added that integrated Windows Live services will provide ways for consumers to interact and engage with MSN and, more importantly, with each other. "We call this 'the social portal'. Content is a very important part of this strategy," said Yamin. Yamin confirmed that during the transition period the MSN Israel portal will continue to operate, adding that both parties were working together to provide support for employees, advertisers and users throughout this period. Meanwhile, reports were confirmed that MSN Israel general manager Shraga Mor is resigning. In response to reports that a third of the company's staff will be laid off, Yamin said that part of the staff will be hired as Microsoft Israel workers. "I hope that no one will be fired, but in these situations there are sometimes shake-ups," said Yamin. MSN is a global portal network which operates in 44 countries. In almost all of these countries the MSN portal is fully owned by Microsoft Corp., and only in a very few instances has Microsoft joined forces with a domestic partner to establish a local MSN portal. "We have been happy to partner with Microsoft in establishing MSN Israel over the last eight years. Since then, we have developed MSN Israel into a leading portal in Israel. Given the change in the parties' online strategies we have agreed it makes sense for Microsoft to operate independently. We believe this is the right move for both parties, and anticipate it will have a positive impact on our results," said Eli Holtzman, CEO of Internet Gold. Holtzman added that the group had significantly expanded its activities in a variety of communications areas over the past couple of years and, as a result, the MSN Israel operations currently represented a minor portion of the group's total revenues. In 2007, MSN Israel accounted for less than 3% of Internet Gold's total revenues. "Thus, we have decided recently to change course and seek alternatives for growth," said Holtzman. "We are continuing to actively examine new and financially significant areas of activity in and out of Israel, which have substantial growth potential and will drive our group to its next phase of business."