Microsoft-backed investors to help dismantle Yahoo?
By Dave Jeyes
In a move that could gut Yahoo’s Search Engine business, investors are currently preparing a takeover bid for the embattled Web advertiser. To add insult to injury, financing for the bid is being provided largely by jilted suitor Microsoft.
Yahoo rejected a takeover bid from Microsoft last June, led by outgoing CEO Jerry Yang (above). Since then, Steve Ballmer has repeatedly assured Yahoos and Yang alike that he wouldn’t make another bid for the company.
So what does Microsoft gain for bankrolling the takeover bid? Reports are that Microsoft would get Yahoo’s coveted search and search engine marketing businesses in the fallout.
These divisions have always been Microsoft’s primary interest in striking a deal with Yahoo. Microsoft’s Live Search efforts have been largely floundering and this deal would infuse both superior technology and likely its user base as well.
The bid is expected to come in at a premium of just 20 percent over Yahoo’s current price of $13 per share. This bid of $15 and change is paltry as compared to Microsoft’s original offer of $35 per share.
The investment group would then get to seed Yahoo’s upper ranks with its own executive talent to replace the deluge of high level managers leaving the company. However the new leadership could have a hard time rallying workers after gutting the company’s most valuable long term asset.
It’s still unclear who would lead Yahoo’s remaining operations for the investment group. Whoever is chosen will be saddled with the burden of not only turning the company around, but also returning on Microsoft’s investment.
Yahoo has signaled repeatedly that it would entertain another bid from Microsoft, but none is forthcoming. In the end, Microsoft CEO Steve Ballmer gets the search business that he initially wanted from the deal and gets to cripple his rival.
I guess it’s really true what they say: hell hath no fury like a Ballmer scorned.
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