Although the official announcement is yet to be made on Monday, reliable sources as reported by the Wall Street Journal said that the Yahoo board has already voted to reject Microsoft’$31 per share buyout bid for Yahoo.
According to the WSJ report, the Yahoo Board believes that the $31 per share bid undervalues Yahoo as one of the web 3 major players. Likewise, it won’t even compensate for the risk that Yahoo would have to go through once it accept the original bid and later find itself reject by regulators.
And how much would Yahoo accept? Apparently, a bid not less than $40 per share is acceptable to Yahoo. But as others would like to believe, Microsoft is not vent on giving that much offer.
So, the questions everybody is asking as early as now, even though there was no official word from Yahoo yet is what is going to be Microsoft’s next move? That remains to be seen, and speculations are surfacing up on the web.
But what everybody seemed to have forgotten is what Yahoo’s next move is? How will it move on after something like this, happened? Microsoft has made its point-that Yahoo is on the losing streak and Microsoft is still all mighty and powerful and is capable of offering to buy Yahoo.
For Yahoo, it is definitely not good to receive an undervalued offer like this. Makes it even harder to bring the company into the right direction.
So why is $31 to them undervalued, when the stock was at $18 before Microsoft made their bid?
@ Chris – For one thing, it’s lower than Yahoo’s 52 week high, so Microsoft is acting on a low point for Yahoo.
By holding out, I suspect Jerry Yang is looking to push the offer another 25% or so. I bet he gets it.
Sean, I agree. I think Yahoo will get it if they are able to push it higher.
This entire deal just seems to have so many cons…from the side of a yahoo user. Currently, Yahoo offers many cool free tools like the Yahoo Developers section etc..and if you give money hungry Microsoft the control, I bet the “cool” and “free” stuff currently on yahoo becomes “expensive” and “subscription based.”. It will be an interesting week to see what develops.
@ Sean – At another 25% you’re looking at another 10+ billion dollars for a property who had pitiful Q4 results. Not to mention, if we’re talking basic supply and demand, MSFT is the only one looking to buy YHOO so exactly what will drive the price upwards? It definitely won’t be the slowing US and global economies. YHOO’s PE is already in the 60′s meaning the stock is probably still overvalued.
Not saying it won’t happen, not saying they should accept, in fact I can’t wait till this story comes to something other than rumor and speculation. I just don’t see the financials pushing this price higher other than MSFT desperation.
@Sean & @ Hagrin – I agree with both of you. Sean you are right that Microsoft is acting on a 52 week high but Hargin you are also right that Yahoo has no future prospects of the stock going naturally higher.
I think Microsoft wants to do anything possible to buy Yahoo, but having to take on a lot of debt to do it is something that is very foreign to Microsoft and I don’t know if they will commit that high.
@Hagrin – I never suggested Yahoo would get the additional 25% figure naturally in the short term, but I certainly feel they could get to the figure MSFT offered. They were there within the last year.
As for going higher, MSFT is hungry to get this deal done and when it comes to how something is priced, it’s all about how badly someone wants it.
It will be interesting to see how it plays out, but I think that it’s a relatively easy sell to the stockholders to “hold out”, now that the Yahoo stock price has already increased as a result of the offer.
I believe Yahoo is undervalued even at $31. Yahoo’s poor performance the last couple of years has lead to a substantial drop in the stock price. Microsoft has likely made a smart play in offering to buy the stock at what was a substantial premium (Microsoft would gladly have paid more 2 years ago).
Yahoo’s failures make it much more difficult to argue (to me anyway) that Microsoft will do worse than Yahoo has at achieving Yahoo’s potential.
Yahoo has already lost in this battle. Other than combining with Microsoft, i do not see any future of Yahoo in the internet market. Webmasters like us would definitely wish to see this major combination that will change the internet marketing world which definitely simmer Google’s arrogance.
Is Google the next?
Yahoo might try to get another 25% but they won’t get it. Why? Because the company is not worth 57 billion, even to Microsoft. The most they would pay is 50 billion tops.
It is better that Microsoft invests that much money in its software engineers and resources to compete with both Google and Yahoo.