What's Yahoo Worth to Microsoft Without Alibaba?

One of Yahoo’s (YHOO) best arguments for getting Microsoft (MSFT) to raise its offer to acquire the company–the portal’s stake in Chinese e-commerce giant Alibaba–is in jeopardy courtesy of antitrust regulations in China.

The New York Times reported Friday that a Chinese monopoly law that goes into effect in August could likely throw a roadblock in front of Microsoft’s bid for Yahoo.

According to the Times:

The law, which goes into effect on Aug. 1, is intended to strengthen an existing set of antitrust regulations the Chinese originally established in 1993. It will make China a third sphere of regulatory influence, matching the power of the European Union and the United States, according to legal specialists in this country and in China who have studied it.

If Chinese authorities raise any objections to Microsoft’s acquisition of Yahoo–and they will because hometown favorite Alibaba is against the purchase–the argument that Yahoo is worth more than $31 a share becomes laughable. In fact, you could argue that Yahoo is worth less than $31 a share. In its pitch to investors arguing that it’s worth more, Yahoo figured that Alibaba was worth $2.25 a share and had a market value of $3.2 billion.

What happens if Alibaba is removed from the equation? Given that Microsoft is already a regulator whipping boy in the EU it may not want to tussle with China too–especially if Alibaba management doesn’t want to deal with the software giant.

Bottom line: Microsoft isn’t likely to lower its price, but these China regulator concerns mean that the company isn’t about to raise its bid any time soon.

Comments

[User 169665:]

What is Yahoo worth without the asset in China, about 35 CENTS

2008 Mar 28 02:43 PM

[discov:]

yeah maybe 20 cents I dunno.

2008 Mar 28 04:24 PM

[YahooFan:]

Did the auther of this article have any knowledge of how Stake holding in a company works. What does he mean by the statement "What happens if Alibaba is removed from the equation?"... Is he trying to indicate that that investment is just going to Vanish ???
One of the 2 scenarios is supposed to happen..
1. Alibaba somehow manages to buy out Yahoo's share of the company. Which means Yahoo gets more than $3.2B in cash
2. Microsoft goes ahead with the Bid and then sells of Alibaba stake to avoid Chinese governments regulatory restrictions..

Either way... the Value of the Bid is not over-shadowed....
When the Bid was made by Microsoft... it was on the Valuation of current assets of the company and the futurr growth path of the combined company to fend off Googles advances in the search marketting sector...
So please do the proper study and stop posting misleading messages to make people think one or other

2008 Mar 28 04:25 PM

[JEFF G:]

Wouldnt microsoft want to hurry up and bid more to get the deal done BEFORE August?

2008 Mar 28 06:20 PM

[gpadave:]

Seems like last two comments right and can be combined. mfst buys before august and sells stake back to alibaba. hope ceo of yahoo doesnt let his own agenda mess up timing

2008 Mar 29 11:55 AM

[George R:]

What makes the most sense to me, Larry, even though I am not convinced that it the best move for this country, is for a group of Japanese, Chinese, German, and/or Indian technology and content companies to come in and take over Yahoo. They could actually pay the folks in Sunnyvale a premium, and probably come out ahead in the long run. More important, perhaps, is that they could stop the spread of "Microsoftism" in their parts of the world.

These are no longer pure American "deals". Folks in Asia and Europe are not interested in this Internet becoming a two man race between Microsoft and Google. It's as simple as that. Why people cannot see this is beyond me.

Hope all is well for you with changes out there at CNET.

George

[e-mail]

2008 Mar 29 12:04 PM

[A737:]

I agree with the last 3 entries, a trend in the making :+). Seriously, I think maybe something may happen soon with Yahoo. On Friday afternoon, late in the trading day there was quite a run up in the stock and the Call options were Really seeing some action! I checked that out and what seemed maybe somewhat significant is that it is now 1 month almost exactly from the initial Microsoft offer. I don't know if this means anything but Yhoo was going up when most eveything was going down. I guess we'll have to wait and see but perhaps not that long.

2008 Mar 29 01:54 PM

[A737:]

P.S. I forgot to mention that there was similar action with the Call options prior to the intitial Microsoft offer of $31.00/share.

2008 Mar 29 01:57 PM

[bato sa bato:]

Thanks YAHOOFAN , I'm sick n tired of hearing anti-yahoofan talking about msft paying a premium and how yhoo price woul plunge if the offer is withdrawn. YHOO didn't ask msft for help!!! Let them withdraw!!! YAHOOFANS will celebrate when Yang and company turns yhoo around.

2008 Mar 29 09:24 PM

[User 170207:]

If this deal fails, Yhoo is going back to the high teens $.
How will the Yhoo board smooth that over?

2008 Mar 30 02:17 PM

[Yitmy:]

Agree, Yahoo! can make it without the unsolicited bid from Ballmer and company. But to save face MSFT may want to increase their bid to get the deal done, or look like a fool when Yahoo! becomes valued for what it is!

2008 Mar 30 02:21 PM

[steveballmer:]

我爱你的照片，好博客！

我爱你的照片，好博客！

fakesteveballmer.blogs...

2008 Mar 30 11:17 PM