Yesterday we reported that Yahoo and News Corp. were still in talks about a possible combination. Now we’ve got a few more details, courtesy of Mike Arrington at TechCrunch. As we suspected, the two are talking about a swap where News Corp. offers up MySpace and the rest of its Web properties, along with some cash, for a Yahoo equity stake. An “unnamed private equity fund” would also join in (Quadrangle?).
Yahoo would be valued at somewhere around $50 billion before the transaction, north of Microsoft’s $44.6 billion bid. That would leave News Corp., plus the private equity group, with more than 20% of the combined entity. They’d be the largest single stockholder and effectively in control of the combined Yahoo/FIM entity and their nearly 150 billion monthly page views (which would be second only to Google).
We see the upside here for News Corp: It gets a huge return on asset it paid $580 million for in 2005, and gets control of a huge slug of ad inventory. The only real advantage for Yahoo, of course, is that it doesn’t have to sell itself to Microsoft. That’s if any of this actually happens: Mike says the two sides are furiously trying to get something nailed down in advance of Yahoo’s board meeting tomorrow. And even if the two get a deal worked out, convincing Yahoo shareholders will be a tough sell.
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