How’s Yahoo Gonna Reject Microsoft?

According to the WSJ and Bloomberg, Yahoo thinks it’s going to reject Microsoft’s Takeover offer.

It begs several questions. Not the least of which is how the hell are they gonna do that?

When someone offers a 60% premium over your current stock price in cash, you’ve got to come up with a pretty darn good reason not accept it or your shareholders are going to revolt.

Some have speculated that Yahoo might make a deal with Google to outsource search or advertising or something: But a deal like that would certainly be the death nail in Yahoo’s coffin.

Remember how well that deal worked for AOL years ago? AOL had 30% of the search market when they outsourced to Google. Now they have about 5%.

The same thing would surely happen to Yahoo if they got in bed with Google Yes they would get more money per search over the next 3-5 years, but after that they would have no bargaining leverage with GOOG and would have to renew on far less favorable terms.

What other options does Yahoo have to reject the Offer? Find a white knight to put up a bid with more favorable terms? Almost no one has the cash to start a bidding war – and who would even want to?

Yahoo is screwed. All they can do is try to bargain a better price. Filo and Yang are just flailing to add one last bit of shareholder value before they’re both out on their asses as an all cash takeover from MSFT would leaves neither with an equity stake in the new “MicoHooey!”

The other question is whether Microsoft anticipated a rejection (either by Yahoo or regulators) and tendered this bid just to fuck with Yahoo. How desparate will Yahoo get to try to stave off Microsoft? Will they have a fire sale? Merge with a worse suitor? Or even sign a dark Pact with the Prince of Searchness?

One thing is certain: 2007 2008 is the End of Yahoo as we know it.

For a predator like MSFT, that’s probably what they were looking for all along.

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4 Responses to “How’s Yahoo Gonna Reject Microsoft?”

  1. chris86 says:

    Nice post. I think you meant *2008* is the End of Yahoo.

  2. Toad says:

    The expression is actually ‘death knell’, not ‘death nail’. h ttp://www.thefreedictionary.com/death%20knell

  3. QuadsZilla says:

    Thanks for the fixes.

  4. MORO says:

    “how the hell are they gonna do that”

    My question is why. What’s wrong with 45 billion? Do Filo and Yang hate money or something?