Officially, Yahoo and Microsoft are at an impasse, but unofficially, the signs point to them moving toward a deal in the low-to-mid-$30s in relatively short order. We think this will probably take at least a couple of weeks, as both parties continue to negotiate through the press and chat with shareholders. But that seems to be where we’re headed.
The data points (some confirmed, others hearsay):
- Microsoft offered $36 last summer
- Microsoft planned to offer $35 until Yahoo blew Q4, at which point it dropped the bid to $31.
- Yahoo rejected $31, but talked only about price and unofficially countered with $40.
- Microsoft scoffed at $40 but suggested it would be willing to come up a little.
- Yahoo troops think Jerry Yang wants $36
- Microsoft’s current bid is worth about $29, so $35 would be a huge win for Yahoo.
- Investors owning nearly a third of Yahoo’s shares own even bigger stakes in Microsoft–and therefore don’t want Microsoft to go hog wild.
- Yahoo shareholders are grumbling that they’ll get “vocal” if Yahoo rejects an improved offer.
- Time works against both parties: Yahoo is paralysed and Microsoft loses more ground all the time.
To us, all this information suggests a deal in the mid-$30s–not immediately, but within a relatively short timeframe. The companies just aren’t that far apart.
Bill Miller (No. 2 Yahoo Shareholder): MSFT Needs to Raise Offer, YHOO Needs to Take It
Microsoft Scoffs at Yahoo $40 Counter, Hires Proxy Firm
New Microsoft-Yahoo Scenarios: 60% Chance of Mid-$30s Sale
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.