Wednesday, April 09, 2008

War: YHOO vs MSFT

"Yahoo and Time Warner’s AOL are negotiating a deal to combine their Internet operations, a source told Fortune.

The news was initially reported in the Wall Street Journal, which stated that Time Warner (TWX) would fold AOL into Yahoo and make a large cash investment for a 20% stake of the combined company. In return, Yahoo would repurchase several billions of its shares in the mid-$30 range. Time Warner is also the parent company of Fortune and CNNMoney.com.

For Microsoft, this means war. The Journal and New York Times have also reported that Microsoft (MSFT) is now in talks with News Corp. (NWS) for a joint bid for Yahoo. Last Saturday, Microsoft CEO Steve Ballmer sent a strongly-worded letter to Yahoo’s shareholders that it should accept its offer within three weeks or face a proxy fight to nominate a new board of directors.

Yahoo is also looking at a possible advertising deal with Google (GOOG). Just hours before the news leaked of Yahoo’s advanced talks with AOL, the Internet portal announced that it would run a preliminary two-week test to run Google’s search advertising.

Yahoo, which has rejected Microsoft’s bid worth $31 a share, is hoping that a partnership with AOL and a possible advertising deal with Google, will be a more attractive offer to its shareholders. There’s no guarantee that Yahoo’s shareholders will go along with the deal if Microsoft comes back with a higher offer."

1 comment:

Buddy Rydell said...

Microsoft is nothing more than a big bully! I hope Yahoo fairs better than anticipated by Microsoft. Hope all the alternative negotiations increase the value of Yahoo stock thus mandating an increase to Microsofts undervalued $31 share bid. Would like to see yahoo to be valued around $34-$36 per share.