The YHOO/MSFT deal took 2 painful months to get to an endgame that we called some time ago: MSFT would acquire YHOO, and it would ultimately pay $35/share or $50B in all (see that here).
But now, we ask, then what?
2008 was sizing up to be the year of the micro deals… and there will continue to be many deals in the $10-99M range. But with YHOO/MSFT hooking up, you have to expect a flood of bigger deals in the $100-999M range, if not more, way more.
We’ve already seen deals such as the $850M acquisition of Bebo by AOL, but once MSFT buys YHOO, AOL itself will be in play. As will IAC (the web division amongst the five new smaller derivatives of the former IAC monster).
The truth is we’re in a great era of consolidation; the carmakers merged like never before at the turn of the 20th century (1800s to 1900s). As Tim Bernes-Lee voiced this week, the Web is in its infancy and web companies are young and will merge to gain the kind of traction they need to really get shareholders attention as growth rates fall and investors will need more than the promise of tomorrow to bid prices higher.
Expect small deals by these companies, for sure, but expect a lot of $1B-plus deals, too. 2008 might be the year of the micro deal… but beyond that, we’re about to enter a dizzying period where multi-billion dollar deals become de rigueur as companies gobble and get gobbled.
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