Henry Blodget of Silicon Alley Insider says that he has heard rumours of at least one and possibly two other bidders who had offers all ready to go for Yahoo before Microsoft jumped in and spoiled the party, and Paul Kedrosky says he has also heard such talk — supposedly private equity groups, likely out of New York, looking to take advantage of Yahoo’s depressed stock price to launch a takeover and then pay for it by selling off bits and pieces.

Update: News Corp. may also be considering a bid of some kind, Mike Arrington reports.

Regardless of whether there are other bidders or not, I don’t see how they can afford to top Microsoft’s offer. Sure, they could probably raise the money to boost their bid, but would it be worth it? The fact is that Yahoo is worth more to Microsoft than it is to anyone else — Microsoft can justify paying a much higher price because it will (theoretically at least) get enough in the way of synergies out of the deal to make it worthwhile.

How is a private equity bidder going to justify a 62-per-cent premium? There just isn’t that much value in Yahoo for anyone else, IMHO.

About the author

Mathew 2414 posts

I'm a Toronto-based former senior writer with Gigaom and my favorite things to write about are social technology, media and the evolution of online behavior

12 Responses to “I think MSFT has already won”
  1. […] of this is likely to come to nothing, though. I agree with Paul Kedrosky and Mathew Ingram – Microsoft has probably already won this deal, simply because they aren’t relying solely on […]

  2. What's the extra value to Microsoft?

    If anything it seems the other way around. They both have search, mail, finance, etc.

    They duplicate each other in so many ways. Would both brands, MSN and Yahoo survive?

    Imagine all the time they'd spend internally arguing about which way to go — collapse two brands into one or have two brands going forward.

    In the end the Yahoo brand will disappear, it always goes that way, and then what did Microsft pay all the money for?

    I don't think you've made your case. Imho.

    • I'm not saying it would be easy, Dave. The post was really just about whether Microsoft would be able to get more value out of buying Yahoo than some private equity group, and I think it would. Regardless of whether the Yahoo brand survives or not — and it arguably has a stronger online presence than Windows Live does — I think the search-advertising business is worth more to Microsoft than anyone else.

  3. […] so far, we hear. All of this is likely to come to nothing, though. I agree with Paul Kedrosky and Mathew Ingram – Microsoft has probably already won this deal, simply because they aren’t relying solely on […]

  4. Why is everyone so excited about “62% premium”???
    That was at the stocks 4 yr low price…
    The stocks 52 week high was 34 and was trading at 31 just 3 months ago. It was pummelled with the market and Jerry Yang's poor CC performance.. but the “62% premium” makes a nice headline.. but I dont think the price is outrageous. Being a longterm shareholder I would hold out for more.. and/or outsource search to Google and attempt to stay indepedent.

  5. […] on Silicon Alley Insider, Mark Evans and Mathew Ingram. addthis_url = ‘http%3A%2F%2Ftechnozzle.com%2F%3Fp%3D78′; addthis_title = […]

  6. I am really worried about this. I love del.icio.us , flickr and have had a yahoo mail address since 2000 but I would hate to see what Microsoft would do with Flickr and del.icio.us. They work so well right now, Mircosoft has been famous for having anything but a hands off approach. Look what happend to iview media pro. Great program that was completely messed with once Microsoft purchased it.

    Say it ain't so!!!!

  7. […] が、それもこれも全て水の泡かもしれない。私もこの件に関してはPaul Kedrosky とMathew Ingramの見方に賛成で、―マイクロソフトは既にこの買収に勝ったのだ。彼らは今回のバリュエーションを表計算だけに頼って出さなかった、ただその1点において既に勝ちは決まったようなものだ。ヘッジファンドにそんな贅沢な真似はできまい。 […]

  8. […] get bids from others, including hedge funds, and possibly from News Corp., though some people (see Mathew Ingram ) suggest Microsoft will still win because they’re willing to pay more of a […]

  9. I think you are right, Mathew.

    Most mergers of this sort actually do not increase shareholder wealth. They are often a sign that management is floundering to define direction. However, I don't believe that is the case with MSFT. They have desperately been trying to build community and Web services (yes for ad revenue, but also for extending their platform). I think it is safe to say that they have not done a very good job at it. So, buying Yahoo! makes a ton of sense in my opinion. It is not a diversion or a company desperately looking to 'jump on board” (hrm .. AOL/TIME).

    Just as Google dropped it's video platform to buy YouTube, MSFT dropping MSN to buy Yahoo makes sense.

  10. I think you are right, Mathew.

    Most mergers of this sort actually do not increase shareholder wealth. They are often a sign that management is floundering to define direction. However, I don't believe that is the case with MSFT. They have desperately been trying to build community and Web services (yes for ad revenue, but also for extending their platform). I think it is safe to say that they have not done a very good job at it. So, buying Yahoo! makes a ton of sense in my opinion. It is not a diversion or a company desperately looking to 'jump on board” (hrm .. AOL/TIME).

    Just as Google dropped it's video platform to buy YouTube, MSFT dropping MSN to buy Yahoo makes sense.

  11. […] นักวิเคราะห์ฝั่งการเงินหลายคนเปิดเผยข้อมูลว่า มีกองทุน hedge fund อย่างน้อย 2 ราย กำลังจ้องจะซื้อยาฮูอยู่ (ด้วยเหตุผลทางการเงินว่าหุ้นของยาฮูตกเยอะ) และนี่เป็นการบีบให้ไมโครซอฟท์ต้องรีบชิงออกมาประกาศซื้อตัดหน้า (ที่มา 1, 2) […]

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