GG now spends rainy days trading equities and currencies. He likes to use a combination of technical analysis and news flow to make trading decisions.
Microsoft/Yahoo Takeover
Where now for Microsoft? And indeed for that matter Yahoo!
The Microsoft board was rumoured to be meeting on Wednesday to consider its options after the deadline for its ‘non-hostile’ takeover approach for Yahoo expired without an agreement last Saturday.
As a bit of background, Microsoft wanted to do an agreed deal with Yahoo-for which they offered just over $44bn or $31 per share in cash and shares. Recent weakness in Microsoft shares has seen the value of the bid rattle back to about $41.8bn or just over $29 a share. Yahoo have suggested that they were willing to talk provided the price was high enough-but an offer of $31 bucks wasn’t close!
Who is going to blink first? Google’s continuing domination of search engine enquiries suggests that a combination of MSN & Yahoo would be a much more competitive force than two separate entities-but is Microsoft willing to pay up?
Suggestions have been made that Microsoft might raise its offer for Yahoo to around $32 or $33, but that key Yahoo shareholders want in excess of $35. However, if Microsoft baulks at paying up and walks away, then the price of Yahoo is expected to crater. Bear in mind that the Yahoo price was under $20 before the shenanigans started.
Yahoo themselves haven’t been idle during this ‘phoney war’. They have posted a decent set of Q1 numbers which has helped to take a bit of the heat off. In addition they have gone cosying up to Google, undertaking a two week trial of Google’s adverts appearing along side their own search results. And there is a rumour of an outside chance of some sort of deal with AOL.
Quite a game of brinkmanship-which if you can judge how keen Microsoft are on the deal could offer the opportunity for some decent gains.
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May 5th, 2008 at 9:36 am
Ah well! The best laid plans………
‘I’ll offer you $33, No we want $37; best we walk away then!’
Difficult to envisage at what price Yahoo shares will crater to when trading resumes this afternoon, but a price nearer $20 than $30 would seem pretty likely.
Currently Out-of-hours trading is taking place at about $22.75, down 20% from Friday.
Plenty of speculation about what happens next-will Microsoft look for a deal with AOL, and what willl Yahoo be able to do in terms of value creation to prove to shareholders that a rejection of a $33 bid was the right strategy?
Some tough questions from Yahoo shareholders to CEO Jerry Lang are however, likely to be forthcoming!
Personally, if a bid is at a reasonably sensible price, I think shareholders should be allowed a vote.
Perhaps the soundings the Yahoo board took from key shareholders suggested that $33 wasn’t going to get a look-in anyway, which is why they felt confident to reject Microsoft’s latest approach out of hand.
Don’t think that the ’search engine’ consolidation game is all over, just that it will take somewhat longer to pan out than I had hoped!
May 6th, 2008 at 3:48 pm
Ooops!
Looks like Jerry Yang may not have consulted key shareholders about the level that they might have accepted!
This from Reuters: ‘Yang’s softer stance came as two of Yahoo’s largest shareholders independently told The New York Times they would have been happy with a deal at $34 per share.
“I am extremely angry at Jerry Yang and at the so-called independent board,” Gordon Crawford, portfolio manager for Capital Research Global Investors, the largest Yahoo shareholder, with some 16 percent of stock, told the newspaper.
Crawford’s sway over media companies is legend. In 2002, he mounted a campaign to force the resignation of AOL Time Warner Chairman Steve Case, the architect behind one of the worse corporate mergers of its era. Case resigned in January 2003′.
Nice to know that one has a supportive shareholder with a large stake looking over your shoulder!
I feel a bit of a corporate backtrack might go on here-which the market is beginning to speculate on. Yahoo now $25.43, up over a buck today.
$33 looks a long way away Mr. Yang……, but to be fair $33 is not $34. Surely they could have spoofed for it/ argued the toss over a ‘goddam measly buck’.