|Two days ago I posted a story about Yahoo announcing their Q4 earnings. In the post I stated, "... Before everyone starts pushing the panic button suggesting that Microsoft is going to purchase Yahoo, wait just a minute..." Not two days later Microsoft puts in a bid to buy Yahoo (again), this time for $44.6 billion. The deal values Yahoo at $31 a share - a 62% premium to the stock's closing price before the announcement. Doesn't this seem undervalued to you? Yahoo (YHOO) stocks has jumped after the announcement ans are currently around the $28/share mark. This is a far cry pre-Google when Yahoo's share price peaked at $108.17 on Dec 31, 1999.
Do you actually think that by Microsoft acquiring Yahoo would take market share from Google? No it would take market share from Yahoo. Yahoo couldn't dent Google, Microsoft is so far behind in search that ASK might catch them within 12-18 months. To me this is a desperation act from Microsoft and an insult to Yahoo. This is more of a reactive move by Microsoft as opposed to an innovative one. They just cannot keep up with Google in terms of innovation, nor can they keep up with ASK for that matter. (At least in terms of a dynamic search product).
George Askew and Scott Devitt of Stifel Nicolaus make a great point when they say "...Hostile-takeover acquisitions in the technology space are rarely successful as employees and management of the acquired company will often depart the combined entity following the acquisition..." This deal will NOT go through. At least not now and not for this amount. Yahoo is not that desperate.
More Report on Microsoft's Attempt to Buy Yahoo
CNN: Microsoft offers $44.6B for Yahoo
Wall Street Journal: Nasdaq Slumps While Yahoo Soars
Businessweek: Microsoft Finally Makes Its Move on Yahoo
Search Engine Watch: Yahoo Board, Sans Semel, to Consider Microsoft Bid
TechCrunch: What Would a Combined Microsoft-Yahoo Look Like?
TechCrunch: WOW. Microsoft Offers $44.6 Billion To Acquire Yahoo
Search Engine Land: MSFT + YHOO: What Would Microsoft Yahoo Look Like?
Search Engine Land: Microsoft Call: "We Love The Yahoo Brand" [But Can The Deal Happen?]
Microsoft Offers to Buy Yahoo for $44.6 Billion (Update7)
Labels: Microsoft to buy Yahoo