Yahoo investor proposal unlikely to push Microsoft

A Yahoo shareholder has distributed a proposal outlining terms for a new acquisition offer by Microsoft.

A relatively small Yahoo shareholder is proposing a new Microsoft takeover offer, but analysts don't think it's enough to entice the companies back to the negotiating table.

On Thursday, Mithras Capital, a California investor and Yahoo shareholder, issued a statement proposing that Microsoft buy Yahoo at US$22 per share, $11 less per share than Microsoft's last offer for the entire company, but still a premium over the current price.

As part of the deal, Microsoft would divest Yahoo's Asian assets and non-search businesses. By Mithras' calculations, assuming Microsoft is able to sell off the non-search businesses at Mithras' estimates, the deal would cost Microsoft about US$10.3 billion.

While analysts say that Microsoft surely wouldn't ignore a good opportunity to buy Yahoo, there's nothing about this proposal that is likely to push Microsoft over the edge. "I'd have to describe it as a long shot," said Andrew Frank, an analyst at Gartner.

In the approximately three months since talks between the companies fell apart, the economic meltdown in the U.S. has driven down the value of Yahoo's stock from around US$22 to around $12. Microsoft also hasn't been immune to the crisis, with its stock price falling from around $26 in July to closer to $22 now.

While the drop in stock value makes Yahoo a less-expensive takeover target, the odds of Microsoft making another offer are about even, said Sid Parakh, vice president of equity research at McAdams Wright Ragen. "It's a 50/50 possibility that they'll come back," he said.

Microsoft now may be considering whether it is better off buying back its own stock or buying Yahoo, Parakh said, because Mithras' proposal values Yahoo's stock at about the same as Microsoft's is trading at. While buying Yahoo comes with the benefit of some search market share, it also comes with the challenges of integrating a large company. "It's a trade-off," he said.

Microsoft and Yahoo both declined to comment on the proposal.

The changed economic conditions don't necessarily make Yahoo a sweeter deal, said Frank. "It may be cheaper, but the other side of the coin is that nobody wants to use cash for anything," he noted.

From a tactical standpoint, Yahoo is still about as attractive a buy as it was when the deal last fell through, Frank said. "If anything, Microsoft's search share has gone down, meaning they need a search solution more than ever," he said. "Assuming that their strategy is still to offer a kind of complete competitive suite of media options for online marketers, there's clearly still a hole there."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Nancy Gohring

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?