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Sunday, May 04, 2008

What happens to the Yahoo and Microsoft deal?

Talks between Microsoft and Yahoo continue as the market closes and the business week comes to an end. Every signal is that the two sides are close to finalizing a deal, somewhere between $33 and $37/share. But are we going to see a deal at all?

If there isn't a friendly deal, is Microsoft going officially for the hostile take over? The market supports Yahoo's claim for "more money" as the stock price rose as much as 11% May 2, 2008 and closed at $28.68.

Analysts are pretty much guessing about a deal to be wrapped up over the weekend and announced on Monday. Their estimate for a cash/stock mix is in the $35 range. Microsoft has signaled that they’ll go as high as $33 this week.

The main reason Microsoft has changed strategies seems to be the willingness of Yahoo to do a search outsourcing deal with Google in the event Microsoft walks away or goes hostile.

The threat is very real, and some experts say that regulatory approval of such a deal would not be as difficult as some have speculated.
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