The M&A folks of any business are always supposed to solicit the highest bid possible. Plus, with companies like Google,
as well as aggressive PE groups, there is always that theoretical chance that something more desirable for Yahoo! would emerge. It may be more an issue of Yahoo!’s management really believing that there is great upside potential if the company remains independent and not wanting to transfer that potential to Microsoft regardless of price. “If it were ever put to a shareholder vote, however, I imagine shareholders would look at the situation much differently and line up in overwhelming numbers in support of a sale to Microsoft”, feels Richard.
At the end of it all, Microsoft is in too strong a position and Yahoo! in too weak a position for the latter to fend off Microsoft’s overtures indefinitely. “Microsoft may have to increase its bid by a dollar or two per share to get the deal done, but I suspect that it will ultimately prevail in this takeover battle,” concludes Richard. A Google-Yahoo! merger has way too much antitrust risk to even consider absent major divestitures, and an independent Yahoo! has been losing a several year battle to both Google and Microsoft. “Ultimately, I believe a lot of this will come down to antitrust issues - would regulators approve Microsoft-Yahoo! merger, and how should those two parties allocate the risk in case regulators either do not approve the deal or require significant divestiture,” says Marc.
To sum up, if Yahoo! posts better Q1 results, it may be able to put up a better case in front of its shareholders for now; but the key consideration is whether the company is ready for plan B, that is standing on its own if need be, since that could very much be a possibility now.
as well as aggressive PE groups, there is always that theoretical chance that something more desirable for Yahoo! would emerge. It may be more an issue of Yahoo!’s management really believing that there is great upside potential if the company remains independent and not wanting to transfer that potential to Microsoft regardless of price. “If it were ever put to a shareholder vote, however, I imagine shareholders would look at the situation much differently and line up in overwhelming numbers in support of a sale to Microsoft”, feels Richard.At the end of it all, Microsoft is in too strong a position and Yahoo! in too weak a position for the latter to fend off Microsoft’s overtures indefinitely. “Microsoft may have to increase its bid by a dollar or two per share to get the deal done, but I suspect that it will ultimately prevail in this takeover battle,” concludes Richard. A Google-Yahoo! merger has way too much antitrust risk to even consider absent major divestitures, and an independent Yahoo! has been losing a several year battle to both Google and Microsoft. “Ultimately, I believe a lot of this will come down to antitrust issues - would regulators approve Microsoft-Yahoo! merger, and how should those two parties allocate the risk in case regulators either do not approve the deal or require significant divestiture,” says Marc.
To sum up, if Yahoo! posts better Q1 results, it may be able to put up a better case in front of its shareholders for now; but the key consideration is whether the company is ready for plan B, that is standing on its own if need be, since that could very much be a possibility now.
