Yahoo! Could Still Slip Into The Arms of Microsoft? (YHOO, MSFT, AOL, GOOG)
October 5, 2011 by Jon C. Ogg
Reading news stories about the next possible buyer for Yahoo! Inc. (NASDAQ: YHOO) resembles nothing so much as a game of Whack-a-Mole. First there was Microsoft Corp. (NASDAQ: MSFT) back a few years ago, with an offer of $31/share (about $44 billion) in 2008. Yahoo declined, but later did a search deal with Microsoft that gave the Redmond-based company pretty much what it wanted in the first place.
Then AOL Inc. (NYSE: AOL) entered the fray in 2010 as possible merger candidate, only to have that story evaporate. There was even talk that Microsoft or Google, Inc. (NASDAQ: GOOG) would make a bid for AOL. Didn’t happen.
AOL popped back up just last month as a possible buyer for Yahoo, but that didn’t last too long either. Today, Reuters has an exclusive report that Microsoft is re-emerging as a possible buyer for Yahoo.
The reason the Reuters story is an exclusive is probably because a Microsoft/Yahoo tie-up now doesn’t make any more sense than it did one, two, or three years ago. Microsoft would have to be crazy to pay Yahoo’s current $18 billion market cap, when China’s Alibaba could tear off more than half that by re-claiming the 40% of Alibaba that Yahoo currently owns. There’s virtually no chance that Alibaba will let Microsoft — or anyone else — keep that big a stake in the Chinese firm.
Yahoo’s shares have jumped another 9% today, to $15.78, in a 52-week range of $11.09-$18.84. Whack!
Paul Ausick
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