'Microhoo' speculation mounts

28 April 2008

Speculation is building over the next move in Microsoft's long-standing courtship of Yahoo.

 

On 5 April, Microsoft chief executive Steve Ballmer wrote to the Yahoo board, warning them that the software giant would make a direct approach to the search engine's shareholders if an agreement hadn't been reached within three weeks.

 

Ballmer warned that after the deadline, which passed on Saturday, Microsoft would seek to replace the Yahoo board.

 

Although neither side has yet made a move, analysts are asking whether Microsoft is likely to carry out its threat. One AP article suggests that it may in fact now walk away from the deal, possibly to return at a later stage.

 

According to TechCrunch, Citigroup's Mark Mahaney puts the likelihood of Microsoft walking away at just 10%. Mahaney rates the chances of a hostile takeover attempt at 40%, compared to a 45% probability that Microsoft and Yahoo will agree a higher offer.

 

TechCrunch publisher Michael Arrington added: "It's Microsoft's move. Expect something by midweek."

 

Writing in his blog, Marc Andreessen examined the possible course of events should Microsoft begin a hostile takeover. "Yahoo's shareholder ownership profile is the key to the ultimate outcome of all of this," he said. "If a majority of the shareholders want Yahoo to stay independent, it very well might be able to – or, if not, not.

 

"In practice, there is a group of about seven or eight large institutional shareholders who will ultimately decide Yahoo's fate," he added.

Category: Google, Natural search, Search engines, Yahoo