In January we wrote a post asking “Will Microsoft Finally Buy Yahoo”.
The following week Microsoft made a $31 a share offer for Yahoo while Yahoo shares were trading at $21.
Of course as we all know this lead to several months of negotiation, after which Microsoft simply walked away from the deal.
On Friday Yahoo closed at just over $12.
So now Microsoft could buy Yahoo for say $21 a share.
Why would Yahoo accept $21 when they didn’t accept $31.
Well don’t forget Carl Icahn got 2 board seats in the Yahoo proxy fight settlement.
And lets not forget Mr. Icahn is in the deal somewhere around $25 a share.
After not selling to Microsoft, Yahoo entered into a partnership deal with Google, a deal which has now been postponed in light of US and European Union anti-trust concerns.
This week a large Yahoo shareholder, Mithras Capital, a Napa, Calif.-based investment fund that says it holds more than 1.9 million Yahoo shares, urged Microsoft to buy Yahoo for $27.8 billion, or $22 a share.
The plan by Mithras Capital proposes that Microsoft then sell Yahoo’s Asian assets and non-search businesses, squeeze out $3 billion in cost savings and receive $2.8 billion of tax benefits, putting the price for Yahoo’s search business at $10.3 billion.
Microsoft own stock has falling about 10 points since it’s original offer. However since Microsoft said it was going to use most of the $40 billion is was going to spend on Yahoo to buy back it own shares and increase it’s dividend.
Moreover, unless the deal with Google gets approved, why would anyone expect Yahoo to be trading over $10 anytime soon, making the acquisition of Yahoo even cheaper in the months to come.
Let’s not forget there is always AOL and News Corp, which has reportedly looked at making a run at Yahoo in the past year.
I think you are likely to see some m & a activity brewing next week, Companies valuations cut in half from irrational selling are going to look very attractive to companies that are not directly exposed to the credit squeeze and have acute mgt that can look 30 days out and not jump off the cliff like so many ceo’s are threatening.
Don
Another big rumor is that Microsoft will buy Research in Motion (RIMM) makers of the Blackberry.
Nice post – with many Company’s going broke this merger could benefit both yahoo and microsoft if a deal is agreed upon.
If yahoo and microsoft so called join forces that would not be good for domain name owners since microsoft would be able to install the default yahoo search engine browser into their ms operating system.
Let’s see what what will be
There are two primary choices in life: to accept conditions as they exist, or accept the responsibility for changing them. -Dr. Denis Waitley
This could be a very interesting week on wall street and clearly one that could change the face of business moving forward….
It is hard to quantify what happend in the last 2 weeks in the market, 7 trillion in losses brought forth by fear and panic.
For companies with good capital bases, not directly tied into the craziness this could be the ulitmate opportunity to grow biz or eliminate competiton. When you have rumors of gm and ford coming together, clearly any possible mergers probably could be thought up…the yahoo deal I think will be tough to push thru as Carl Icaan I believe is above 24+ on his cost per share basis and he maintains 2 board seats…
The one key variable I think astute biz owners and domainers should recognize is the need to have more control over there biz, diversify portfolios and have some cash on hand for the rainy days.