Microsoft Yahoo: Is $32 now the magic number?


Microsoft’s very well played game to win Yahoo at a bargain price is wrapping up even more favorably than Microsoft planned. Yahoo refused the Icahn MS offer today to buy just pieces of the company, though in typical fashion Yahoo did not outline many details of their decision making process, rather they simply asserted it was a bad idea.

Obviously this was a strategic rather than serious move by MS as noted by Henry Blodget, though he’s wrong to think this is just a small play to soften up the Yahoo board before the proxy fight in August.

In fact this is the end game of a very smart plan by Ballmer / MS to aquire everything for less than they have been planning to pay for over a year. Yahoo’s intransigence has simply delayed the process by a few months and saved MS a few dollars per share on what they would have paid.

Over at Silicon Valley Insider we have Henry basically begging for an offer over $31 and indicating support for less.

Yahoo board is now *begging* MS for the $33 they could have had easily a few months ago but may not see again. MS can get it all for less so I’m now guessing the meeting offer will be $31 or $32. That will make MS look generous for keeping to the original plan in the face of a weakening Yahoo, and it will be acceptable to shareholders fearful of YHOO at $18 or lower if this all collapses.

Although this is likely to be resolved at or soon after the upcoming Yahoo board meeting it doesn’t have to resolve to work in MS’s favor. Yahoo’s pretty much exhausted all their options to the extent that it’s either Yahoo in the 30 range with Microsoft or Yahoo under 20 without MS.

Disclosure: Long on YHOO

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About JoeDuck

Internet Travel Guy, Father of 2, small town Oregon life. BS Botany from UW Madison Wisconsin, MS Social Sciences from Southern Oregon. Top interests outside of my family's well being are: Internet Technology, Online Travel, Globalization, China, Table Tennis, Real Estate, The Singularity.
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3 Responses to Microsoft Yahoo: Is $32 now the magic number?

  1. glenn says:

    MS gets Yahoo for less than $30 per. My guess it will end up $28-$30

    Yang, et al, screwed the shareholders and hopefully they will all file a class action lawsuit against Yang personally to recoup their losses.

  2. JoeDuck says:

    Glenn you may be right, though if a new board sweeps in and takes an MS offer much lower than what was on the table they’d be up for the kind of scrutiny I think is not going to happen…ergo…an MS offer in line with a few months back.

  3. glenn says:

    Well Joe it is one year later and Microsoft has smacked Yahoo! into oblivion.

    BING is now going to be Yahoo!’s search engine. Of course Google will try to make a mess of this in the courts but if the deal is successful this is a HUGE win for Microsoft.

    The click thru rate is 55% higher on BING than it is for Google.

    Yahoo’s stock is still under $16 a share and Microsoft now gets to siphon all that ad revenue, etc right from Yahoo for the next 10 years.

    This ultimately will be the end for Yahoo.

    The original deal Microsoft has proposed to purchase Yahoo was a great deal and it shows just how much arrogance (Yang) gets in the way of making good sound business decisions.

    http://www.dailytech.com/Microsoft+Yahoo+Officially+Anounce+Partnership+Bing+to+Replace+Yahoo+Search/article15815.htm

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