As the agreement between Yahoo and Google has fallen through, many in the media are speculating about what this means for Microsoft and another possible acquisition attempt of Yahoo. I thought you might be interested in some thoughts from Emery Trahan, Ph.D., the Donald J. Harding Professor of Finance at Northeastern University’s College of Business Administration (you can find his bio here: http://cba.neu.edu/faculty/directory_detail.cfm?e=37):
“Carl Ichan, a major Yahoo shareholder, is urging Yahoo to seek the sale of its search business to Microsoft. While Yahoo management may still be reluctant to do a deal with Microsoft, Microsoft and major Yahoo shareholders may be eager. Since the original offer from Microsoft on February 1st until the offer was dropped on May 2nd, Yahoo shares were up consistently close to 50%, while Microsoft was down around 10%, while the NASDAQ composite was up around 3.5%. The market saw clear value to Yahoo shareholders from a merger, and questioned the value to Microsoft. As of November 6th, Microsoft is down almost 36% and Yahoo is down over 27%, while the NASDAQ is down almost 33%,” Dr. Trahan says. “While the broad tech market is down, clearly Microsoft is under pressure to do something and Yahoo shareholders are still feeling burned from the loss of value due to not doing a deal with Microsoft. With Google and Yahoo abandoning their plans for a deal on an advertising pact this week, due largely to regulatory pressure, and Microsoft trying to steal a deal with Verizon from Google, the door may again be open for a Microsoft Yahoo merger, or at least a deal for Yahoo's search business. Obama's recent election win may slow the short-term pressure, as a change in antitrust enforcers early next year may lead to a more accommodating regulatory climate.”
“Carl Ichan, a major Yahoo shareholder, is urging Yahoo to seek the sale of its search business to Microsoft. While Yahoo management may still be reluctant to do a deal with Microsoft, Microsoft and major Yahoo shareholders may be eager. Since the original offer from Microsoft on February 1st until the offer was dropped on May 2nd, Yahoo shares were up consistently close to 50%, while Microsoft was down around 10%, while the NASDAQ composite was up around 3.5%. The market saw clear value to Yahoo shareholders from a merger, and questioned the value to Microsoft. As of November 6th, Microsoft is down almost 36% and Yahoo is down over 27%, while the NASDAQ is down almost 33%,” Dr. Trahan says. “While the broad tech market is down, clearly Microsoft is under pressure to do something and Yahoo shareholders are still feeling burned from the loss of value due to not doing a deal with Microsoft. With Google and Yahoo abandoning their plans for a deal on an advertising pact this week, due largely to regulatory pressure, and Microsoft trying to steal a deal with Verizon from Google, the door may again be open for a Microsoft Yahoo merger, or at least a deal for Yahoo's search business. Obama's recent election win may slow the short-term pressure, as a change in antitrust enforcers early next year may lead to a more accommodating regulatory climate.”
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