A Marriage Made in Heaven – Carol Bartz of Yahoo and Steve Ballmer of Microsoft
The BBC reports that Yahoo may be back in play again:
Shares in Yahoo rose on reports that China’s Alibaba Group was preparing a takeover bid with private equity firms Blackstone and Bain Capital.
It cites unconfirmed reports that Alibaba is talking to those private equity companies about bidding up to $20 a share compared with Yahoo’s current market price of $16. That would value Yahoo at $25 billion.
That must leave Yahoo shareholders grinding their teeth in frustration, since the company in 2008 rejected a bid from Microsoft worth $45 billion. That offer even included an option to sell for $31 per share cash for shareholders who didn’t fancy taking Microsoft shares. Yahoo, then led by Jerry Yang, refused the offer. That led to Mr Yang being forced out of the company.
The BBC speculates that part of the reason why Alibaba wants to buy Yahoo is simply to get back the 43% of Alibaba that Yahoo owns.
Yahoo has been struggling for years, but still has some very important web assets. Its portal is still the most visited site in the US; it still has a market share in search that is comparable with Microsoft’s (though far behind Google’s) and it owns lots of other valuable internet properties like Flickr. So the value that Microsoft saw in Yahoo back in 2008 is basically still there.
If Alibaba buy Yahoo with private equity finance, they may well sell it on to Microsoft, minus Yahoo’s stake in Alibaba.
If they don’t, Microsoft may yet bid again for Yahoo themselves. They could even sell that stake badck to Alibaba to defray some of the cost.
The alternative is for Yahoo to soldier on, probably for years, selling its assets to keep itself afloat, its presence gradually dwindling into irrelevance.
Yahoo has potentially huge value to Microsoft – and precious little value to anyone else. Shareholders get a nice juicy wad of cash – though less than they could have had back in 2008 if Jerry Yang hadn’t been such a prima donna. Customers benefit because Google gets some real competition at last. Microsoft gets a chance to carve a real stake in the web-based future. Yahoo employees get to work for one of the world’s powerhouses.
If Microsoft do end up owning Yahoo, it really will be best for everyone. What’s not to like?