Internet, media stars line up for Yahoo
Updated: 2008-04-10 21:10
Because Google and Yahoo control a combined 80 percent of the U.S. search market, any long-term advertising alliance between them almost certainly would have trouble getting antitrust clearance, analysts said.
A broader relationship between Yahoo and Google also would face intense political scrutiny, said Sen. Herb Kohl, D-Wis., who chairs a committee overseeing antitrust issues.
A Yahoo-AOL combination probably would have to overcome shareholder skepticism because both companies have been fading in recent years. Before Microsoft announced its bid Jan. 31, Yahoo's market value had plunged by nearly $30 billion during a two-year period. AOL is now believed to be worth about $10 billion, about half of its value when Google paid for a $1 billion stake in 2005.
And Microsoft might alienate one of partners, Facebook Inc., if it teams up with News Corp. in an attempt to buy Yahoo. Microsoft last year paid $240 million for a 1.6 percent stake in Facebook, which is the second largest online network behind News Corp.'s MySpace.com.
Yahoo has been working for more than two months to put together a package that trumps Microsoft's takeover bid.
Microsoft has set an April 26 deadline for Yahoo to accept its current offer, which was initially valued at $44.6 billion, or $31 per share. The deal's value has eroded because Microsoft wants to pay for half of the acquisition with its recently declining stock.
Analysts have said that Microsoft can afford to pay about $35 per share, or about $50 billion, for Yahoo without undermining its future earnings. Yahoo has indicated it thinks its franchise is worth at least $40 per share, or more than $55 billion.
Yahoo's ad tests with Google make a friendly deal with Microsoft less likely and raises the odds that Microsoft will follow through on a recent threat to lower its bid, said Standard and Poor's equity analyst Scott Kessler.
In a statement Wednesday, Microsoft reiterated its bid is fair and pointed out the antitrust problems likely to prevent Google and Yahoo from working together.
"This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo," said Brad Smith, Microsoft's general counsel. "We will assess closely all of our options."
Microsoft has said that if things can't be worked out amicably, it is prepared to oust Yahoo's 10-member board in a proxy contest that could prolong the drama into the summer.
|
||
|
||
|
|
|
|