Microsoft, Yahoo Deal Is Hopefully on Fast Track

I can't blame Microsoft (MSFT) for getting a little impatient with the top brass over at Yahoo (YHOO). Now that Microsoft has set a three-week deadline for making some progress (in a letter sent out this weekend), hopefully this whole thing will be concluded shortly.

For some reason, Yahoo seems to think they have leverage here. Their stock was in the teens, their business was deteriorating, they got a $31 per share buyout offer, and yet they are still quacking that MSFT should raise their offer. With no competing bids? Why would Steve Ballmer do that?

Yahoo should be thrilled that Microsoft is so keen on doing a deal. Deals with 60% premiums aren't really open for renegotiation when there are no other interested parties, and this fact will force Yahoo's hand.Yahoo should simply come to the table and tell Microsoft that they'll agree to sell, but that they will take no less than $31 per share in real economic value (MSFT is offering half stock, so the actual price is below $31 right now). Either MSFT offers 100% cash or they increase the share exchange ratio to ensure Yahoo shareholders actually get $31, not $28 or $29. Come on everyone, let's get this done already.

Full Disclosure: Long both MSFT and YHOO at the time of writing.

Comments

[Thomas Barta]

What are you smoking? The deal is a disaster for both companies. I find it hard to believe ANYBODY can think that tying two "rocks" together can make a boat. And, of the two, Yahoo is clearly the more competent company. At least they offer a few decent services.

[??]

One man's garbage is another's treasure.

YHOO may be your garbage stock, but for MSFT it's the treasure for fighting with GOOG.

I don't understand why people don't understand this point.

[Thomas Barta]

"YHOO may be your garbage stock, but for MSFT it's the treasure for fighting with GOOG."

Well, duh, you could just buy Google.

Google: "Don't be evil". Ballmer: "Be evil three times before breakfast".

[Youngman]

so why are you still long YHOO? Bettr sell quick before MSFT drops the offer price!

[Mike@Yahoo]

Thank you for the fresh, original thought on the Yahoo!-Microsoft deal.

Oh, wait, you don't have any fresh, original thoughts. Just the same old crap that every financial reporter writes - in attempt to run out in front of the latest parade and act like they're part of it.

Hopefully, you're on the fasttrack to a job where you're not allowed to share your thoughts....ever again.

[mashiyach]

Hold out Yahoo! Do the only right thing!

Microsoft is a doomed company. Their business model dysfunctional.
Microsoft's wild business model only works when you can eat or harm other companies.
Google said no, all companies should say no to Microsoft!

To compete with Google you need to be innovative, Microsoft is not, the problem is that Microsoft believes it has the power, it has not.
Only desperation now.
Innovative companies over the world, say no!
Don't be fooled by their money. They are nothing worth.
Don't let a dying beast catch you!

A.I.O