BUSINESS BLOGS
BUSINESS BLOGS
category: business
05 Feb 2008

Rumor has it that MSFT offered YHOO $56/share back in 2006.

I’m not sure it’s true or not, but since then, both MSFT and YHOO have lost share to Google in search market share. YHOO has bought Right Media, Blue Lithium, Flickr, etc., and MSFT itself has acquired aQuantive. In other words: yes $56 is a bit out of reach, but $31/share is a tad too low.

But, let’s face it, no one will come close to paying nearly as much, let alone more. If I were Jerry Yang, YHOO’s CEO and co-founder, here’s what I would say to MSFT:

“Our stock has traded at $34 as early as November 2007, and as high as $40 as early as January 2006. You are offering $31, which means that net of Alibaba and Yahoo! Japan, you are valuing us at $10-$15 or so, or $12B-$20B in market cap.

We’ll sell, because we realize at this juncture it’s inevitable. But, we can do this the easy way, or the hard way. You have until March 13th to nominate board members, and you cannot call a board meeting until our annual shareholder meeting. Lastly, while we recognize it will cost us our jobs, we do have a poison pill we can trigger.

Sure, there’s Google who can pay us billions to power our search, but that will only make them stronger… and even considering it will cause your lobbyists to bitch to the government, so let’s try to avoid deal purgatory and call it a deal at $50 market cap, or just north of $40/share.

$25B in cash + $25B in stock.

Deal? Or no Deal?”

What do you say gents?

Note: long YHOO

Note: Long YHOO.