Google moves to derail Yahoo buyout - NEW YORK
Microsoft expects Yahoo’s board and shareholders to accept offer quickly
(NEW YORK) Standing between a marriage of Microsoft and Yahoo may be the technology behemoth that has continually outsmarted them: Google.
In an unusually aggressive effort to prevent Microsoft from moving forward with its US$44.6 billion bid for Yahoo, Google has emerged with plans to play the role of spoiler.
Publicly, Google came out against the deal, contending in a statement that the pairing, proposed by Microsoft last Friday in the form of a hostile offer, would pose potential threats to competition that need to be examined by policy makers worldwide.
Privately, Google went much further. Its chief executive, Eric E Schmidt, placed a call to Yahoo’s chief, Jerry Yang, offering to help fend off Microsoft, possibly in the form of a partnership between the companies.
Google’s lobbyists in Washington have also begun plotting a case against the deal to make with lawmakers. In addition, several Google executives made ‘back-channel’ calls over the weekend to allies at companies like Time Warner, which owns AOL, to inquire whether they planned to pursue a rival offer and how they could assist. Google owns 5 per cent of AOL.
Despite Google’s efforts and the work of Yahoo’s own bankers to garner interest in a bid to rival Microsoft’s, one did not seem likely, at least at this early stage in the process.
Frequently named prospective suitors including Time Warner, News Corp, and AT&T have not begun work on a bid. They suggested that they did not want to enter a bidding war with Microsoft, which has much deeper pockets than those rivals and could easily top their offers.
Meanwhile, people close to Yahoo said that the company received many inquires from potential suitors in the media, technology and private equity industries. Some inside Yahoo have even speculated about the prospect of breaking up the company. That could mean selling or forming a joint venture for its search-related business and spinning off or selling its operations that produce original content, they said.
One person involved in Yahoo’s deliberations suggested that ‘the sum of the parts are worth more than the whole’, arguing that its various pieces like Yahoo Finance, for example, could be sold to a company like News Corp for a huge premium while Yahoo Sports could be sold to a company like ESPN, a unit of the Walt Disney Co.
Rival companies were less optimistic about such a breakup strategy. ‘No one can get to a US$44 billion price, even if you split it into a dozen pieces,’ an executive at a major media company said. ‘And the price is going to be higher anyway. That was Steve’s opening salvo,’ this person said, referring to Microsoft chief executive Steven Ballmer.
Yahoo would consider a business alliance with Google as a way to rebuff Microsoft’s takeover proposal, a source familiar with Yahoo’s strategy said.
Yahoo management is considering revisting talks it held with Google recently on an alliance as an alternative to Microsoft’s bid. At US$31 a share, Yahoo believes that the bid undervalues the company, two sources said.
Microsoft said yesterday that its unsolicited offer for Yahoo was generous and it expects Yahoo’s board and shareholders to agree to the buyout quickly. ‘We trust the Yahoo board and the Yahoo shareholders will join with us quickly in deciding to move down an integrated path,’ Mr Ballmer said in an annual meeting with analysts.
Microsoft chief financial officer Chris Liddell said that the company may borrow money for the first time ever to fund a portion of the 50-50 cash and stock offer for Yahoo. — NYT, Reuters
Source : Business Times - 05 Feb 2008
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