Posted by: Rob Hof on January 7, 2009
Under the terms of the proposed deal, the investment group would make a takeover bid for Yahoo at a relatively low premium of around 20% to its current price of around $13 per share, valuing the company at just over $20 billion.
A complicated financial structure would be put in place to finance the deal, but the bulk of the cash for the transaction would come from Microsoft as debt.
… Simultaneous to the transaction Yahoo’s search and search marketing business would be sold to Microsoft under terms similar to what Microsoft proposed in June 2008 (and nothing like the bogus reports from The Times in November).
Following the transaction the new executive team would take over the top ranks of Yahoo.
Sounds kinda byzantine to me. I don’t see why Microsoft wouldn’t prefer to come back with its own bid, which presumably would be more carefully considered given Yahoo’s continuing struggles, the challenging environment for display advertising, and a new Yahoo CEO soon to be appointed. Perhaps Microsoft will find it appealing not to have to deal with Yahoo directly, and when it comes to these two companies, it seems almost anything can happen. But I’m still doubtful all these pieces can come together. UPDATE: Neither is Microsoft, says Bloomberg. Or Yahoo. Trial balloon, indeed.
There’s another reason for skepticism, notes Henry Blodget at Silicon Alley Insider: the mere 20% premium over the current sub-$13 price. (It appears the sale of the search business would happen after the buyout, meaning existing shareholders wouldn’t benefit from that.) Not nearly good enough for Blodget, at least, who sniffs:
There is NO WAY we are selling Yahoo for about $15 a share. Done. End of story.
Oh, we can only wish.