Another day, another percentage point or two off the price of Microsoft’s stock (MSFT). This means that Microsoft’s current offer for Yahoo (YHOO) is now below $29 a share–$28.81 to be precise.
As a reminder, Microsoft has offered to buy Yahoo for a 50/50 cash/stock deal composed of $31 of cash and 0.9509 Microsoft shares per Yahoo share. As the price of Microsoft stock changes, therefore, the value of the offer changes. And thus far, as Microsoft investors express their distaste for the deal, Microsoft’s stock has mostly tanked.
So here’s where things stand now. Unless Microsoft adjusts the exchange rate (which will result in more dilution to Microsoft shareholders) or changes the percentage of cash (which will result in higher debt and interest payments), the value of the offer for Yahoo shareholders is now $28.81 per share. Yahoo shareholders might want to take note: Right now, the stock’s trading above that level.
VALUE OF MICROSOFT OFFER AS OF THIS WRITING
Cash Portion: $31
Stock Portion: 0.9509 Microsoft shares per Yahoo share
MSFT price: $28
Value per YHOO share: $26.62
Offer Value: $28.81
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