Yahoo to Reject Microsoft Buyout Offer
Feb 9th, 2008 by Shaun Carter
On Monday, Yahoo will be announcing that they are rejecting the unsolicited $44.6 Billion buyout offer they received from Microsoft earlier this month.
This is exactly the move I was hoping for. Depending on how traders take the news on Monday, Yahoo shares could climb if they believe Microsoft will make a counter-offer or they could plummet and create a terrific buying opportunity, as I hope they do.
Yahoo will state that they are unwilling to accept any offers lower than $40 per share. If shares do fall to pre-buyout levels of $20/share, then a buyer at that price could double up on news of an increased offer of $40 or more per share from Microsoft or another bidder. Another problem with Microsoft’s original offer was that it was a cash and stock deal, and Microsoft shares have fallen more than 10% since the offer was announced, further diluting its value.
There is talk that Yahoo would be better off signing up Google to serve sponsored search links on Yahoo.com to generate increased revenue, but I doubt that an arrangement like that would win over regulators.
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