Microsoft (MSFT) is considering making a pre-emptive public offer for Yahoo (YHOO), Peter Lauria at the Post reports, with the aim of forcing Yahoo’s irate shareholders into demanding that the company sell itself. This strategy worked brilliantly for Murdoch (NWS) with Dow Jones (DJ), and it would probably have a chance here as well (as long as the bid was high enough).
Microsoft would only make this bid, Lauria also says, if its talks with Facebook fall through. Apparently it feels it can only afford to do two multi-billion dollar deals this year, not three. (To which we say, the minority Facebook investment will only cost $500 million–a few weeks of cash flow)
Lauria also offers this amusing detail, which goes part way to explaining why Microsoft has been trumped at the last second by Google on so many acquisitions in recent years:
…One source said that Microsoft thinks the [Facebook] discussions are much further along than Facebook does, which speaks to the trouble Microsoft is having adapting to the new deal environment in Silicon Valley.
“They still expect people to come to them with deals first,” said one of the sources, “and they assume that deals are done before they are actually done.”