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M&A Bankers on Yahoo-Microsoft: Done Deal

Posted Feb 21, 2008 07:25am EST by Henry Blodget in Investing, Internet, Venture Capital, M and A, IPOs
Related: msft, yhoo

From Silicon Alley Insider, Feb. 21, 2008:

We canvassed a couple of Wall Street M&A moguls last night for their thoughts on how the Microsoft-Yahoo (MSFT/YHOO) deal would play out. Their thoughts:

  • It's a done deal.
  • Jerry's language in his "letter to shareholders" was a bold move. The use of the word "subtantially"--as in "Microsoft's bid "substantially undervalues" Yahoo--will expose the board to lawsuits if the deal gets done at, say, $32-$33. Yahoo's lawyers must be peeing in their pants about this, especially since the value of Microsoft's offer has since dropped
  • Microsoft will give Yahoo a couple of weeks to "have its talks" with others. These talks won't lead anywhere, and both sides know it.
  • Microsoft will gradually ramp up the proxy fight rhetoric. Meanwhile, Yahoo's board will begin to get more and more pressure from Yahoo's big institutional shareholders to initiate talks.
  • At some point soon, Yahoo's lead banker, Goldman Sachs, will call Microsoft's lead banker, Morgan Stanley, and talks will begin.
  • At the 11th hour, Microsoft will offer a price concession--but only at the 11th hour.
  • The price concession will not necessarily raise the value of the offer above $31 per share, the original value (It's currently $28.80). Microsoft will argue that its stock is down with the market and that, but for Microsoft's offer, Yahoo's stock would be down, too. (This will be b.s.--MSFT is down more than the S&P500--but perhaps Microsoft's bankers will find some tech index to compare MSFT's stock to).

See Also:
Yahoo Pads Employees' Pockets at Microsoft's Future Expense
Will Microsoft Get Jerry Fired?

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12 Comments

you
Yahoo! Finance User - Thursday February 21, 2008 01:26PM EST

Great.

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you
lvnvtsalv - Thursday February 21, 2008 02:35PM EST

Unless the term "substantially undervalues" is backed-up by persuasive evidence as to a future price for Yahoo stock I would not be concerned by any vague hyping of Yahoo's supposed future price by Mr.Yang and lawsuits.

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you
muellemh - Thursday February 21, 2008 03:32PM EST

I hope that Yahoo drops the ball and their shareholders vote to get rid of the officers. The premium that MSFT is offering is huge and Yahoo's board is just being greedy. I don't think that would happen but I would laugh if it did because they deserve to get fired for not accepting the deal.

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you
Yahoo! Finance User - Thursday February 21, 2008 06:06PM EST

Jerry, make your shareholders happy give let us have 31.00

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you
BusDevGuy - Thursday February 21, 2008 07:06PM EST

The deal will never happen folks... sorry to burst your bubble!

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drcastro22
drcastro22 - Thursday February 21, 2008 07:09PM EST

Mr. Taggit, what's the possibility of china play thru alibaba?If mr. Jack Ma can can get a consolidation of investors that can outbid msft ,do you think Mr. Yang can pull this through the regulators? Will this be similar to the deal of lenovo and IBM?

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you
Yahoo! Finance User - Thursday February 21, 2008 07:43PM EST

Yahoo's latest move i.e. to sweeten the pot for employees who might be terminated if the "deal" happens, is curious. Microsoft wants Yahoo's people. That's part of the premium they're willing to pay. It costs MS $1.4 billion for every dollar they increase their offer, but only $20-30 million for a proxy fight. What would you do? They might offer slightly more in order to expedite the deal, but only if they feel Yahoo will accept a new offer and it saves them the time invested in a proxy fight. From their standpoint, it needs to happen sooner rather than later.

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you
joan_dittrich - Thursday February 21, 2008 08:26PM EST

NO DEAL-------- YAHOO'S NOT GOING TO SELL THEMSEVES CHEAP.

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drcastro22
drcastro22 - Thursday February 21, 2008 09:25PM EST

Msft knows the true value of yhoo that's why they're so persistent in acquiring it. Yhoo didn't solicit for msft's bid.And It's basically the big institutions who have shares of both companies who'll benefit the most from the acquisition of yhoo at a low price.If there is no presence of such institutions with overlapping shares, it's probably would have been a done deal!! A silmpler problem for mr. Yang.

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you
pro_forma_scam - Thursday February 21, 2008 11:27PM EST

MSFT should get clearance from government first. why waste the time if it'd be considered a monopoly?

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you
tpmavrakos - Friday February 22, 2008 07:44AM EST

Share holders wont accept 31.its a waste of time and money for a proxy. msft should up the bid to 36.shareholders will take that.yang knows it. done deal.alibaba is worth upping the bid

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Yahoo! Finance User
Yahoo! Finance User - Friday February 22, 2008 09:52PM EST

When will Jerry and board get to the table?

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