Ask.com, Microsoft and AOL - Internet Love Triangle?

I remember hearing a few weeks ago that Diller would consider selling Ask.com (IACI) (formally AskJeeves.com). I immediately thought of 2 suitors, Microsoft (MSFT) (Bing) and AOL.com (TWX).

Both companies have made deals to increase their reach. Microsoft is making a deal with Yahoo (YHOO) and Aol purchased Bebo. AOL will be out of TWX soon and will need some kind of growth since its ISP business is all but dead.

Both companies need and want ask.com for its amazing content and reach of 'eyeballs'. Ask.com has over 50 different branded companies. Most are in the top 5 websites for their niche. Some even have branched out into TV, the CollegeHumor series for one. They also have evite, citysearch, match.com, and zwinky. All of these properties could be expanded on their own or added to an existing property from the potential suitors. Some could even be spun off for a quick return of a portion of the purchase price.

Microsoft has not been the .com darling, they have literally thrown Billions of dollars at the internet with not much to show for it. AOL will always be tainted concerning its failed merger with Time Warner.

Curently, IACI trades at about $19/share with a market cap of $2.25 Billion. I can see AOL or Microsoft making a bid of $25 per share or $3.3 Billion for the entire company and walking away with a nice internet trophy.'

Hey, they have to do Something. What are your thoughts?

Disclosure: I am long MSFT. I hold no positions in IACI or Time Warner AOL

Comments

[diphen1]

You're a little confused or misinformed.

Diller expressed selling Ask.com, not the entire IAC portfolio of companies. Ask.com does not have over 50 branded companies, IAC does. If AOL or Microsoft were to buy Ask.com, they would most likely only be getting Ask.com. Since IAC is a cash cow (high cash reserves, low debt), it's highly unlikely that Diller would sell the entire IAC portfolio.

2009 Nov 05 10:51 AM

[Thomas Jowers]

<IMG class=authors_reply src="static.seekingalpha.co..."> Why wouldnt Diller sale the entire company for a 31% premium? You are right when you say that it is IACI that owns all of the companies. But didnt Diller break up IACI so that it would better situated to make strategic partnerships, mergers, and buyouts? I can still see the whole company being bought out soon. Google cant buy it because they want to stay off of the antitrust/monopoly radar. Yahoo isn't going to try. The only other buyers could be a media company or advertising company but they are going to be bargain hunting due to the the fall in advertising revenues last year and this year.
This is all Just my Opinion.
Thanks for the Feedback!

2009 Nov 05 11:50 AM