What's Yahoo Worth to Microsoft Without Alibaba?
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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.
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.
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This article has 12 comments:
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
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
Gpaine3@yahoo.com
How will the Yhoo board smooth that over?
我爱你的照片,好博客!
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